Toyota keeps profit goal intact, defying Covid-19 pandemic and rivals

Toyota Motor reported a profit of 13.9 billion yen (S$180.4 million) in the April-June quarter.
Toyota Motor reported a profit of 13.9 billion yen (S$180.4 million) in the April-June quarter.PHOTO: REUTERS

TOKYO (BLOOMBERG) - Toyota Motor reported a surprise operating profit and kept its outlook for the full year intact, showing its resilience to the global automotive slowdown that has forced other major carmakers to post deep losses.

Japan's biggest automaker reported a profit of 13.9 billion yen (S$180.4 million) in the April-June quarter, even though analysts projected, on average, a loss of 207 billion yen. For the fiscal year through March, Toyota kept its operating profit outlook of 500 billion yen.

Although slim for an automaker with an annual output of 10 million vehicles, the results deliver on president Akio Toyoda's vow to remain profitable during the pandemic. Volkswagen, Ford Motor and other automakers have reported billions in losses as the pandemic decimated demand, underscoring Toyota's expertise in containing costs during both good and bad times. Tesla Inc. was another rare example of a profitable carmaker, with Elon Musk's company benefiting from market-share gains and capacity expansion.

"There clearly are winners and losers," said Tatsuo Yoshida, an analyst at Bloomberg Intelligence. "Toyota's progress has been really good" compared with other Japanese automakers, he said.

The shares of Toyota climbed after the results, and were up 2.3 per cent at the close in Tokyo. The stock is down 12 per cent this year. The Nasdaq OMX Global Auto Index is up about 4.5 per cent over the same period.

The pandemic has forced dealers to close showrooms and manufacturers to idle factories around the world, with global auto sales declining 22 per cent in the first half to 4.16 million units. Toyota's revenue for the quarter fell 40 per cent to 4.6 trillion yen, slightly exceeding analysts' prediction for 4.4 trillion yen.

For the full year, Toyota kept its sales forecast at 24 trillion yen. Analysts are projecting, on average, annual revenue of 24.7 trillion yen.

"Toyota was already more profitable than other automakers," said Seiji Sugiura, an analyst at Tokyo Tokai Securities, adding that the company also rolled out new models. "They should return to normal by the fourth quarter."

Toyota also released a net income outlook of 730 billion yen, below analysts' projection for 1.1 trillion yen. Toyota has decided to forgo an earnings news conference for fiscal first- and third-quarter results.