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Toyota raises forecast for profit on rising sales

Feb 05 2016 09:30
Craig Trudell and Yuki Hagiwara

Tokyo - Toyota raised its profit forecast after surging sales of RAV4 sport utility vehicles and Lexus luxury models, putting it on track to become the first Japanese company to top ¥3trn in annual operating profit.

Net income may rise to ¥2.27trn yen for the year ending in March, from an earlier forecast for ¥2.25trn yen, the company said in a statement on Friday. Analysts predict the world’s largest automaker will probably earn ¥3.07trn in operating profit in the 12-month period, the average of 26 estimates compiled by Bloomberg. The company said it will buy back up to 0.74% of its shares.

Third-quarter net income rose 4.7% to ¥628bn, beating the ¥619.9bn average analyst estimate. The company said its full-year forecasts don’t take into account the impact of a production halt this month due to a shortage of parts.

President Akio Toyoda is steering the maker of Prius hybrids toward its third-straight record year, out-earning all other Japanese automakers combined.

With sport utility vehicles drawing unprecedented demand in the US, Toyota is positioning its compact RAV4 to supplant the Camry sedan as the new volume leader in its largest market. Lexus had its best year globally in 2015 and finished just behind BMW in the US.

Toyota’s period of prosperity hasn’t stopped the company from shaking things up. It plans to discontinue the Scion brand that targets young American buyers in August, re-badging all but one model as Toyotas, while buying out Daihatsu for about ¥389bn in stock to make it a wholly owned subsidiary. The goal will be to transform Daihatsu into a global small-car brand as valued as BMW AG’s Mini.

Toyota also is looking to deepen its partnership with Mazda. The two companies have assembled a panel to study potential alliances for green cars and other technologies, Tetsuya Fujimoto, a Mazda executive officer, said on Thursday. Toyota already owns stakes of Subaru maker Fuji Heavy Industries and truck makers Hino and Isuzu Motors.

The automaker began California sales of its Mirai fuel cell vehicle and production of a redesigned Prius hybrid in the quarter. Toyota could parlay the heavy investment it’s made in hydrogen fuel cells and gasoline-electric autos into more joint production or development projects to lower costs.

Toyota still faces major challenges as it looks to close out the rest of its fiscal year. It’s shutting down all Japan assembly plants for at least one week after an explosion at affiliate Aichi Steel’s plant relied on for engine, transmission and chassis components.

Trading company Toyota Tsusho warned the disruption to production could compare with Japan’s earthquake and tsunami almost five years ago.

toyota  |  industrial
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