Toyota Increases Annual Profit Forecast After Surpassing Estimates in Q3

Japan’s Toyota Motor has raised its full-year operating profit forecast by nearly 9% on Tuesday, after its third-quarter earnings raced past analysts’ estimates, as a result of a weaker yen and strong sales of high-margin cars and hybrid vehicles.

Toyota shares surged 4.4% after the announcement, recovering from a 0.7% fall earlier.

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 high interest rates and slowing demand for electric vehicles (EVs).

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

According to LSEG data, the Japanese firm raised its profit forecast for the current year to 4.9 trillion yen ($33 billion) from 4.5 trillion expected previously. That is well above an average analyst forecast of 4.6 trillion yen.

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

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

In the fiscal third quarter, hybrid sales soared 46%, contributing to an 11% rise in overall vehicle sales. By geography, North America, Toyota’s biggest market by volume, reported the strongest growth with a 28% sales surge.

Its home market Japan saw sales grow just 5% but reported the highest earnings and margin among its major 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 North America’s 3.4%.

A weaker yen currency, which has tumbled around 10% against the dollar since end-2022, bolstered the impact of Toyota’s robust global sales.

Toyota retained its crown as the world’s top-selling automaker for the fourth consecutive year after posting record annual sales of 11.2 million vehicles for 2023.

But the firm is grappling with a series of scandals at its group companies over product certification test procedures that threaten to hurt its reputation for quality and safety.

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

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