In all probability, shares of Toyota Motor Corporation (NYSE: TM, TM message board) are evenly set to add on Wednesday’s gains on unexpected fiscal second quarter earnings that left median street estimates trailing at a distance. Major factors contributing to the surprise results includes the hard-line cost cuts introduced in the quarter and the political intervention that brought about incentives to spearhead the revival of the auto sector across the globe. This quarterly profit also prompted an opportune moment for the world’s most prominent carmaker to upgrade its targets for the full year ending March 31, 2010. Toyota joined its cross-town rivals – Nissan Motor Company, Ltd. (PinkSheets: NSANY) and Honda Motor Company, Ltd. (NYSE: HMC) – who have likewise revised their annual forecasts for the better, on account of the relative success of government stimulus programs.
Net profit of $241.8 million for the July – September period came in as a relief to the previous three losses in succession. Better still, the second quarter figure got the better of a loss amounting to about $266.2 million which had been projected by analysts. Yet, on year-over-year level Toyota’s earnings for the just ended three months shows a decrease of 84 percent from $1.5 billion having yielded to the negative effects of the Yen’s appreciation against the Dollar, amid a subdued demand in the key markets.
This year’s operating profit, in relation to that of the matching period in 2008, tumbled almost 66 percent to $643.3 million, from approximately $1.9 billion. Sales at the company plunged as well, arriving at $50.4 billion during the period, 24 percent down from $66.3 billion of the same quarter a year ago. The decline of the aforementioned figures could have been worse had it not been for the cost reduction impact of the idled facilities and layoffs over the months to September.
“The net revenues and profits declined for this period due to the decline in vehicle sales in each region, as well as the negative impact of the Yen’s appreciation”, stated the executive vice president of Toyota, Yoichiro Ichimaru. “However, we continued to make improvements in our reduction in fixed costs and cost reduction efforts in the first half of fiscal year 2010”. Meanwhile, the carmaker announced that it has officially withdrawn from Formula One Racing in an additional cost reduction effort that could see the company saving about $554.6 million per annum.
On assumptions that the worst crisis to hit the auto industry since 1976 was over, The Japanese automaker is now looking at selling 7.03 million units through end of March, 2010, from a previous forecast of a more cautious 6.6 million cars. In conformity, the company halved down its full fiscal year loss outlook to $2.2 billion, compared to a $4.9 billion loss predicted earlier.
In U.S trading, the TM stock had advanced on the news to $80.45 during the lunchtime session, from a close of $79.46, the previous regular session. The shares have had a 24 percent growth so far this year.
Reference:
http://www.toyota.co.jp/en/index.html
User comments
Follow the discusion about Toyota Motor Corporation in the forum