Toyota Report Full-Year Profit but Warns of Slowdown in the Year ahead

Japanese car giant Toyota reported a record full-year net profit on Wednesday, thanks to a weaker yen and US tax cuts.

However, it warned about the outlook for the next 12 months.

Toyota shares jumped 3.8%

in Tokyo trading to ¥7,424, their highest level in three months. Wednesday’s gain also brought the stock into positive territory for the year.

The country’s top car maker said net profit jumped 36.2% to ¥2.49-trillion ($23bn) in April-March, but for the current year it expects that to fall 15% to ¥2.12-trillion.

It said sales rose 6.5% to a record ¥29.3-trillion despite a 0.1% decline in vehicle sales by unit.

Operating profit surged 20.3%, which it said was mainly due to the cheaper yen and cost-cutting.

Toyota officials have said the profits were also the result of other factors, including US tax cuts.

"As for the future automotive market, developed countries are expected to remain steady while emerging countries are expected to expand gradually," it said.

It said the automotive industry was facing a moment of "profound transformation" because of "increasing serious environmental issues and other social challenges, (and) technological innovation such as automated driving".

It expects a strong yen for the current fiscal year, with sales forecast to slip 1.3% to ¥29-trillion.

A stronger yen makes Japanese car makers less competitive in foreign markets and deflates profits when repatriated.

In the year to March, both sales and operating profit in Japan grew, while operating profit in North America, its main foreign market, declined despite a rise in sales.

The fall was the result of "increase in sales expenses, and decreases in both production volume and vehicle unit sales", Toyota said.

Analysts say the Japanese automotive industry benefited from US corporate tax cuts for the fiscal year.

"Toyota quickly recovered thanks to the US tax cuts and a weak yen for the last fiscal year," Satoru Takada, an analyst at TIW, a Tokyo-based research and consulting firm, told AFP ahead of the Wednesday earnings report.

But he said: "It is hard for the company to draw up a positive scenario for the current fiscal year as positive factors can’t be seen."

Late last month, Toyota’s smaller Japanese rival, Honda, said annual net profit grew more than 70% thanks to strong growth in sales of its cars and motorcycles, as well as US tax cuts.

AFP and Bloomberg