Japan’s auto giant Toyota Motor Corp posted strong second quarter earnings and beating forecast driven by higher global vehicle sales and a much better performance in the North American market. This prompted the company to announce that it was planning a share buyback worth $1.8 billion.
Toyota reported a 14 per cent rise in operating profit at 662.3 billion yen in the second quarter which is the strongest for the company since the second quarter of 2015. Refinitiv data showed that estimates from nine analysts forecast profits at an average of 592.3 billion yen.
Toyota said that 2.75 million vehicles were sold globally compared to the 2.18 million that it had sold in the same period last year.
The performance of the company was driven by a 45.6 per cent year on year rise in sale in North America together with a 3.4 per cent rise in sale in Asia.
Less discounting in North America helped the company to double the operating profit in the market which has been a problem for the company over the last two years.
"New models of the RAV4 and the Corolla, as well as last year's Camry, have been well received in North America, so we've been able to lower incentives," Operating Officer Kenta Kon told reporters at a briefing. The company further said that by March end next year, it would be buying back shares worth up to $1.8 billion amounting to 34 million shares. The company also maintained its forecast for operating profit for the complete fiscal year to March to drop by 2.7 per cent which would be the first drop after three continuous years of growth because of an expected strengthening of the yen that would weigh down on its exports. The company also pointed out to weakening demand in India, Indonesia and Thailand which it said would lower its forecast for annual global car sales by 2.7 per cent to 10.7 million units. Despite the handicap, the company still expects to report record sale – more than last year’s record of sale of 10.6 million vehicles.
The forecast drop in profits by Toyota for the full year is however lower than what has been reported by some of its smaller competitors including Mitsubishi Motors Corp Subaru Corp and Mazda Motors Corp – all of which have estimated dull year profit outlook to drop by up to 67 per cent earlier this month because of weak demand for cars globally. A number of the smaller companies have said that the need for heavy investment for the development of self-driving cars and electric vehicles is a challenge for them to keep down costs.
Cost-cutting has become a challenge for Toyota because of increase R&D investments and rising labour costs, the company said. It however added that during the last quarter, it had still managed cost savings of an additional 45 billion yen.
Every possible way to cut production costs and improve efficiency at its factories is being looked at by the company, said Executive Vice President Mitsuru Kawai. "(Each drop of paint) on its own would represent only a fraction of a yen in savings, but if we add up these efforts we can build a savings effect," he said.
(Source:www.businesstoday.in)
Toyota reported a 14 per cent rise in operating profit at 662.3 billion yen in the second quarter which is the strongest for the company since the second quarter of 2015. Refinitiv data showed that estimates from nine analysts forecast profits at an average of 592.3 billion yen.
Toyota said that 2.75 million vehicles were sold globally compared to the 2.18 million that it had sold in the same period last year.
The performance of the company was driven by a 45.6 per cent year on year rise in sale in North America together with a 3.4 per cent rise in sale in Asia.
Less discounting in North America helped the company to double the operating profit in the market which has been a problem for the company over the last two years.
"New models of the RAV4 and the Corolla, as well as last year's Camry, have been well received in North America, so we've been able to lower incentives," Operating Officer Kenta Kon told reporters at a briefing. The company further said that by March end next year, it would be buying back shares worth up to $1.8 billion amounting to 34 million shares. The company also maintained its forecast for operating profit for the complete fiscal year to March to drop by 2.7 per cent which would be the first drop after three continuous years of growth because of an expected strengthening of the yen that would weigh down on its exports. The company also pointed out to weakening demand in India, Indonesia and Thailand which it said would lower its forecast for annual global car sales by 2.7 per cent to 10.7 million units. Despite the handicap, the company still expects to report record sale – more than last year’s record of sale of 10.6 million vehicles.
The forecast drop in profits by Toyota for the full year is however lower than what has been reported by some of its smaller competitors including Mitsubishi Motors Corp Subaru Corp and Mazda Motors Corp – all of which have estimated dull year profit outlook to drop by up to 67 per cent earlier this month because of weak demand for cars globally. A number of the smaller companies have said that the need for heavy investment for the development of self-driving cars and electric vehicles is a challenge for them to keep down costs.
Cost-cutting has become a challenge for Toyota because of increase R&D investments and rising labour costs, the company said. It however added that during the last quarter, it had still managed cost savings of an additional 45 billion yen.
Every possible way to cut production costs and improve efficiency at its factories is being looked at by the company, said Executive Vice President Mitsuru Kawai. "(Each drop of paint) on its own would represent only a fraction of a yen in savings, but if we add up these efforts we can build a savings effect," he said.
(Source:www.businesstoday.in)