Toyota stays on track to report record $36b in annual profit

Employees riding on Toyota Motor's Winglet personal mobility devices at its showroom in Tokyo, Japan, yesterday. Toyota last month kept the title of world's top automaker for the fourth straight year after announcing that it sold 10.15 million vehicl
Employees riding on Toyota Motor's Winglet personal mobility devices at its showroom in Tokyo, Japan, yesterday. Toyota last month kept the title of world's top automaker for the fourth straight year after announcing that it sold 10.15 million vehicles globally last year.PHOTO: REUTERS

TOKYO • Toyota Motor  stayed on track to become the first Japanese company to top 3 trillion yen ($36 billion) in annual operating profit, buoyed by surging sales of sport utility vehicles and Lexus luxury models.

Nine-month operating profit rose 9 per cent to 2.31 trillion yen, the company said yesterday. Analysts estimate that the world's largest automaker will earn a record 3.07 trillion yen in operating profit for the fiscal year, though Toyota said its own forecast does not take into account that it is suspending production in Japan next week. President Akio Toyoda is steering the maker of Prius hybrids towards its third straight record year, out-earning all other Japanese automakers combined.

With sport utility vehicles drawing unprecedented demand in the United States, 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 last year and finished just behind BMW in the US.

"Expectations have been really high for Toyota," Mr Koji Endo, an analyst with Advanced Research Japan, said by phone.

"Even if their profit has to come down next year, their profitability will still be their second-highest anyway. The US market is very strong and the Chinese market seems to be recovering."

Toyota has said all its domestic parts plants will shut for a full day next week, expanding a production suspension that is set to be its longest since the March 2011 earthquake and tsunami disaster.

The move is due to a components shortage following an explosion at a supplier. It was not clear if the temporary production shutdown would affect results in the current quarter.

"We are going to take all the necessary measures for a speedy recovery of production," Toyota managing officer Tetsuya Otake told a news briefing.

Also this week, Toyota said it will drop its Scion brand, the often-quirky line of cars it launched in the US more than a decade ago targeted at younger Americans.

The company said the move was driven by a market shifting away from small cars and by changes in buying habits.

Yesterday's report comes after Toyota last month kept the title of world's top automaker for the fourth straight year after announcing that it sold 10.15 million vehicles globally last year, driving past Volkswagen and General Motors.

BLOOMBERG, REUTERS

A version of this article appeared in the print edition of The Straits Times on February 06, 2016, with the headline 'Toyota stays on track to report record $36b in annual profit'. Print Edition | Subscribe