Toyota raises annual profit forecast after better-than-expected third quarter

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A sign is displayed outside a Toyota Motor Corp. dealership. on January 30, 2024 in Tokyo, Japan.

Tomohiro Ohsumi | Getty Images News | Getty Images

Toyota motor raised its full-year operating profit forecast by nearly 9% on Tuesday, after third-quarter earnings beat analysts’ estimates thanks to a weaker yen and strong sales of high-margin cars and crossovers breed

Toyota shares rose 4.4% after the news, recovering from an earlier 0.7% fall.

The higher forecast from the world’s best-selling automaker contrasts with a downbeat outlook from many of its rivals who have warned of tepid sales growth and announced production cuts this year due to levels high interest and slow demand for electric vehicles (EVs).

Toyota, a laggard in battery-powered EVs, is seen outperforming rivals this year, helped by strong demand for hybrid vehicles, which began more than a quarter-century ago with the Prius model.

The Japanese company raised its profit forecast for this year to 4.9 trillion yen ($33 billion) from 4.5 trillion previously expected. That’s well above the average analyst forecast of 4.6 trillion yen, according to LSEG data.

Toyota’s operating profit for the three months to December 31 came to 1.68 trillion yen, up 75.7% a year earlier and beating the average profit estimate of 1.3 trillion yen in a poll of nine analysts by LSEG.

Hybrids accounted for about a third of the total sales of more than 10 million vehicles of the Toyota and luxury Lexus brands last year.

In the third fiscal quarter, hybrid sales increased 46%, contributing to an 11% increase in total vehicle sales. By geography, North America, Toyota’s largest market by volume, reported the strongest growth with a 28% sales increase.

Its home market of Japan saw sales of just 5% but reported the highest earnings and margins among its core markets. Japan contributed two-thirds of Toyota’s quarterly profit and generated a 20% operating margin, well above the company’s overall margin of 14% and 3.4% in North America.

A weaker yen, which has fallen about 10% against the dollar since the end of 2022, strengthened the effect of Toyota’s strong global sales.

Toyota retained its crown as the world’s best car maker for the fourth consecutive year after posting annual sales of 11.2 million vehicles for 2023.

But the company is embroiled in a series of scandals at its group companies over product certification testing procedures that threaten to damage its reputation for quality and safety.

Toyota’s president apologized last week for the inconvenience and concern caused by misconduct at two subsidiaries and an affiliate.

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