The Toyota company logo is pictured at the India Auto Show 2018 in Greater Noida, India, February 7, 2018. REUTERS/Saumya Khandelwal
May 9, 2018
TOKYO (Reuters) – Toyota Motor Corp on Wednesday forecast a 4.2 percent slide in operating profit for the current financial year, as it expects a stronger yen to offset slightly higher global vehicle sales and cost reductions.
Japan’s biggest automaker expects operating profit to ease to 2.3 trillion yen ($21.02 billion) in the year to March 2019, slightly higher than a median forecast for 2.19 trillion yen from 23 analysts polled by Thomson Reuters I/B/E/S.
Toyota’s forecast is based on the assumption that the yen will trade around 105 yen to the U.S. dollar in the current financial year, compared with 111 yen in the year just ended.
A stronger local currency can dent profits repatriated from overseas and raise the cost of finished products and parts when they are shipped between countries.
A hit to earnings will make it harder for Toyota, the world’s most profitable automaker to continue investing in new technologies and products at a time when global automakers are competing fiercely to develop self-driving cars, electric vehicles, and connected technologies.
It posted an operating profit of 2.4 trillion in the year just ended, outpacing rivals Volkswagen AG and Daimler AG for the fifth straight year. This resulted in an operating margin of 8.2 percent, roughly level with Daimler’s 8.15 percent and trailing Indian maker Maruti Suzuki India Ltd’s 11.3 percent, the highest among major global automakers.
The automaker is targeting total group sales of 10.5 million vehicles globally in the year to March, slightly more than 10.44 million vehicles last year.
In the year to December 2017, Toyota was the world’s No. 3 maker of passenger cars, following the Nissan-Renault-Mitsubishi alliance and Volkswagen.
It expects sales in North America, its biggest market, to
ease slightly to 2.8 million units, while sales in Asia are seen rising to 1.67 million units from 1.54 million last year.
In North America, Toyota and its domestic rivals are grappling with intense competition along with falling demand for sedans, a mainstay of Japanese automakers in the region, amid an overall slowdown in the world’s second-biggest auto market.
(Reporting by Naomi Tajitsu; Editing by Himani Sarkar & Shri Navaratnam)
