Toyota Logs Record Earnings on Brisk Sales in Emerging Markets

Tokyo, Feb. 5 (Jiji Press)–Toyota Motor Corp. said Tuesday brisk automobile sales overseas, notably in emerging markets, boosted its April-December group earnings to record highs.

Net profit for the first three quarters of fiscal 2007 grew 13.1 pct from a year earlier to 2,014,966 million yen. Operating profit increased 12.3 pct to 1,873,722 million yen, on sales of 19,722,192 million yen, up 11.9 pct.

The figures are all record highs for the April-December period.

“Robust sales in such emerging markets as China and Russia, as well as in Middle Eastern and Latin American countries, contributed significantly to Toyota’s robust earnings,” Senior Managing Director Takeshi Suzuki said at a press conference.

The effects of upbeat overseas sales were amplified by the yen’s weakening last year against the dollar and the euro. Though foreign exchange losses eroded Toyota’s operating profit by 20 billion yen in October-December, the company enjoyed exchange gains of 150 billion yen during the April-September first half.

But despite the upbeat April-December earnings, Toyota kept intact its earnings and vehicle sales forecasts for the full year to March 2008 due to concerns about a slowdown in North American sales and the yen’s appreciation against the dollar and the euro.

Toyota expects to report a net profit of 1.7 trillion yen, up 3.4 pct from the previous year, and an operating profit of 2.3 trillion yen, up 2.7 pct. Sales are projected at 25.5 trillion yen, up 6.5 pct.

Annual global vehicle sales are targeted at 8.93 million units, up 4.8 pct.

In October-December, global automobile sales, including those by subsidiaries Daihatsu Motor Co. and Hino Motors Ltd. , increased 5.8 pct to 2,281,000 units.

North American sales dipped 1.0 pct to 756,000 units, reflecting shrinkage in the overall U.S. auto market. Three-month operating profit in the region tumbled 35.8 pct to 63.6 billion yen, due mainly to 23.8 billion yen in valuation losses on interest rate swap deals in the financial business division.

“The fallout from the U.S. subprime mortgage crisis, coupled with rising gasoline prices, affected Toyota’s U.S. operations,” Suzuki said.

By contrast, combined vehicle sales in the Middle East, Latin America, Africa and Oceania increased 27.9 pct to 435,000 units, with operating profit from the regions surging 61.0 pct to 49.9 billion yen.

There is a global trend in automobile demand toward small, fuel- efficient vehicles amid rising environmental awareness and skyrocketing oil prices. But Suzuki said that in these emerging markets, large models like the Land Cruiser off-road vehicle, which have high-profit margins, are selling well.

“Toyota will further accelerate sales in these emerging markets,” Suzuki said.

October-December vehicle sales in Asia, excluding Japan, increased 18.1 pct to 241,000 units, and operating profit jumped 2.3- fold to 64.3 billion yen, boosted mainly by brisk sales in China.

Sales in Europe grew a scant 0.7 pct to 308,000 units, with operating profit falling 2.3 pct to 34 billion yen.

Suzuki noted that auto demand in such Western European countries as Germany, Britain and Italy are falling as the markets become saturated. “But falls in demand in Western Europe are being offset by brisk demand in Russia and Eastern European countries,” he said.

Sales in Japan, which have been on a downtrend due to stagnant demand across the industry, remained unchanged at 541,000 units in October-December, helped by a series of new model launches. Operating profit from domestic operations grew 1.5 pct to 389.4 billion yen.

Toyota’s earnings are based on U.S. accounting standards.[EARNINGS]END

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