• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

Toyota Reports 39 Percent Jump in Profit

Posted on: Friday, 4 August 2006, 06:00 CDT

By YURI KAGEYAMA

TOKYO - Toyota chalked up a 39 percent jump in profit for its first fiscal quarter as soaring gas prices led drivers around the world to snatch up the Japanese automaker's models known for their good mileage.

Toyota Motor Corp., which also benefited from a weaker yen and cost-cutting efforts, reported Friday a 371.5 billion yen ($3.2 billion) profit in the April-June quarter, a sharp rise from 266.9 billion yen in the same period the previous year.

Quarterly sales surged 13 percent to 5.6 trillion yen ($49 billion) from 4.98 trillion yen a year earlier, according to the company, which is based in Toyota city, central Japan.

Toyota, the world's second biggest automaker after General Motors Corp., is not the only Japanese automaker to record recent robust results, in contrast to the plight of GM and other U.S. automakers, whose gas-guzzling image is hurting sales.

Some analysts say Toyota is on track to overtake GM as the world's No. 1 automaker in vehicle production and sales in a few years.

Toyota sold 2.09 million vehicles around the world in the latest quarter, up from 1.95 million the same period a year earlier. Sales were especially robust in North America where it sold 747,300 vehicles, up more than 16 percent from 641,200 sold in the first quarter of last year.

Toyota models previously seen as rather small like the Corolla and niche offerings like the Prius hybrid - which switches between a gas engine and electric motor to deliver better mileage - are gaining new appeal in the U.S., where retail gasoline prices have risen to about $3 per gallon.

In July, Toyota for the first time beat Ford Motor Co. in U.S. vehicle market share, outselling Ford to be No. 2 after GM. Ford's year-to-date sales are still ahead of Toyota's, and the U.S. companies blamed the drop in market share on last summer's heavy incentives, or discounts on car prices, that had artificially elevated sales.

"Toyota's results were excellent," said Tsuyoshi Mochimaru, auto analyst at Deutsche Securities in Tokyo, adding that Toyota's earnings got an extra lift from investment costs that had dragged down profits last year. "Sales growth in the American market worked as a big plus for Toyota."

Toyota kept unchanged its forecast for the full fiscal year ending March 2007, at 1.31 trillion yen ($11.4 billion) profit on 22.3 trillion yen ($194 billion) sales. It also maintained its vehicle sales forecast for fiscal 2006 at 8.45 million vehicles, up from 7.97 million Toyota sold in the fiscal year ended March 31.

During April-June, Toyota's vehicle sales in Japan stayed flat and dipped in Asia but improved in Europe, as well as North America and other regions.

In quarterly revenue, Toyota reported a 14 percent increase in Japan, 19 percent rise in North America and 24 percent surge in Europe. While revenue inched down 4 percent in Asia it leaped 25 percent for other regions during the three months.

Also contributing to Toyota's bottom line were a weak yen, which added 100 billion yen ($871 million) to operating profit, and 20 billion yen ($174 million) in cost cuts, the company said in a statement.

Toyota is likely to continue to get a big lift from the growing global interest in fuel-efficiency. Toyota has recently begun selling a hybrid version of the Camry sedan in the U.S. The Camry has been the best-selling car in North America for eight of the last nine years.

Japanese rival Honda Motor Co., which reported a 29.6 percent increase in profit to 143.4 billion yen ($1.2 billion) for the quarter through June, has also been boosting its U.S. market share. Honda makes the Civic and Accord, both reputed as delivering solid mileage.

In contrast to Toyota's booming results, U.S. automakers have been struggling.

GM, which is shutting plants and sending thousands of workers on early retirement, lost $3.4 billion in the latest quarter, while Ford lost $254 million.

But Toyota has faced its own troubles, including increasing numbers of recalls that are partially due to its efforts to cut costs by using the same parts across various models.

Japanese authorities have launched a criminal investigation into three Toyota officials suspected of failing to act on knowledge about a faulty steering part, which may have caused a 2004 head-on accident that injured five people.

Toyota also faces a sexual harassment lawsuit in the U.S. filed against Hidetaka Otaka, who has since stepped down as the president and chief executive of Toyota's U.S. unit. Otaka says he is innocent.

Toyota appointed Jim Press, an American who headed Toyota's U.S. sales unit, as president of Toyota Motor North America Inc., overseeing sales and engineering divisions as well as 12 manufacturing plants in the U.S. and Canada - the first non-Japanese to take that position.

Toyota shares, which have gained about 50 percent in the last year, inched down 0.5 percent in Tokyo to finish at 6,080 yen ($53).

Source: Associated Press/AP Online

More News in this Category