Toyota Profit Rises on Hybrid Sales, Weak Yen — 3rd Update

By Kosaku Narioka

Toyota Motor reported a rise in its first-quarter net profit, driven by stronger sales of hybrid vehicles and a weaker yen.

The Japanese carmaker said Thursday that net profit increased 1.7% from a year earlier to 1.333 trillion yen, equivalent to $8.89 billion, for the three months ended June. That beat the estimate of Y1.218 trillion in a poll of analysts by data provider Quick.

First-quarter revenue climbed 12% to Y11.838 trillion, helped by a weaker yen. Group vehicle sales volume declined despite higher hybrid sales, as a sharp fall in domestic sales more than offset some gains in overseas markets.

Toyota Motor left its forecasts for group vehicle sales and earnings unchanged for the fiscal year ending March 2025.

The carmaker continues to expect group vehicle sales to decline 1.3% to 10.95 million units this fiscal year. It continues to project revenue will rise 2.0% to Y46.000 trillion and net profit will fall 28% to Y3.570 trillion.

A weaker yen boosts earnings for Japanese exporters like Toyota, as it makes exports more competitive abroad and increases the value of profits earned overseas in yen terms.

The outlook is murkier for a scenario of earnings growth fueled by a weak yen. The Japanese currency has been strengthening against the dollar since early July due to growing expectations for the Bank of Japan's unwinding of monetary stimulus and the U.S. central bank's potential rate cuts.

When Toyota announced the earnings forecasts in May, it assumed the yen would trade at 145 against the dollar this fiscal year. The yen was recently around 150 to the dollar, compared with about Y161 a dollar in early July.

The company's shares ended 8.5% lower on Thursday, extending losses following the quarterly results announced during the day. The stock has erased much of the gains made earlier this year and is now up a mere 4.2% in 2024.

First-quarter operating profit rose for Asia and Europe from a year earlier but fell for North America. Masahiro Yamamoto, accounting group chief officer, said the profit increase in Asia outside Japan was led by India, though the business in China is "very challenging."

Toyota has been benefiting from a shift among consumers in the U.S. and some other markets to gasoline-electric hybrid vehicles from fully electric vehicles amid concerns about charging problems and higher prices associated with pure EVs.

Toyota in June suspended shipment of a few models in Japan after it found that it didn't fully follow the government's testing standards when seeking certifications for the vehicles.

Japan's transport ministry in January instructed domestic automakers to investigate their model certification processes after it discovered serious breaches by Toyota's small-car unit, Daihatsu Motor.

--Chieko Tsuneoka in Tokyo contributed to this article.

Write to Kosaku Narioka at kosaku.narioka@wsj.com

(END) Dow Jones Newswires

August 01, 2024 03:30 ET (07:30 GMT)

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