The company admits that the slumping dollar could erode overseas earnings
POSTED: 1:30 a.m. HST, Aug 5, 2010
TOKYO » Toyota reported a quarterly profit of $2.2 billion, reversing from red ink a year earlier as the world's top automaker benefited from a global sales recovery that offset lingering doubts about the safety of its cars.
The company, which makes the Camry sedan and Prius hybrid, raised its full-year earnings forecast yesterday, and said it now expects to sell 7.38 million vehicles worldwide for the year through March 2011, up from 7.24 million the previous year. Previously it forecast sales of 7.29 million vehicles.
The numbers show that Toyota Motor Corp. is on a recovery track from the sales battering it took from the global financial crisis two years ago and the blows to its image from massive recalls that began last October.
U.S.-traded shares jumped $1.48, or 2 percent, to $74.25 in trading yesterday on the New York Stock Exchange.
Toyota acknowledged uncertainties lie ahead, including the surging yen, which erodes the value of overseas earnings, but is expecting sales to expand in Asia, South America, and other emerging markets.
Still, Toyota's car sales remain far lower than the 9 million-plus vehicles it was selling globally while on its way to overtaking General Motors Co. as the world's No. 1 automaker.
At that time, an ambitious Toyota, which had appeared unstoppable as U.S. rivals GM and Chrysler stumbled, had set a goal of reaching global sales of 10 million vehicles within several years.
Toyota's revenue for the April-to-June quarter surged 27 percent to Yen4.87 trillion ($57.3 billion) as car sales jumped in North America, Japan and other parts of Asia including Thailand and Indonesia.
The only trouble spot was Europe, where auto sales were lagging partly because of concerns about Greece's debt crisis, according to Toyota.
Its quarterly profit of Yen190.47 billion ($2.2 billion) was achieved despite worries that Toyota's recalls of popular models would hurt sales. The result was a sharp improvement from a loss of Yen77.8 billion the year before when the global recession crushed car sales.
Toyota said cost reductions of Yen50 billion ($588 million) also helped its latest results, offsetting the damage from a stronger yen, estimated at Yen30 billion ($353 million).
The car maker raised its profit forecast for the year through March 2011 to Yen340 billion ($4 billion) from Yen310 billion ($3.6 billion), underlining the staying power of the automaker amid fears about quality control.
It increased its annual sales revenue forecast to Yen19.5 trillion ($229 billion) from Yen19.2 trillion ($226 billion). Revenue the previous year was Yen18.95 trillion.
Tsuyoshi Mochimaru, analyst at Mitsubishi UFJ Morgan Stanley Securities Co., said Toyota may lose some market share to rivals because of the recall but many consumers will see them as routine.