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Toyota on track for record profit

Running on empty: Toyota says it will wait for the Productivity Commission’s final report due in March before commenting on what it means for the car-maker’s future.

No word on future of Aussie operations as Toyota speeds towards record $21b profit

Toyota logo7 Feb 2014

TOYOTA Motor Corporation is hurtling towards a record profit of ¥1.9 trillion ($A20.9 billion) for its financial year ending March 31, with strong sales worldwide and a weakening Japanese yen driving up earnings at a time when the world’s number-one auto-maker is considering the future of its Australian operations.

There was no specific word on its Victorian-based car and engine production facilities when TMC released its third-quarter financial results this week – a decision is due within months – but company management presented a positive view of the road ahead, albeit with some cautionary notes.

It is understood Toyota Australia president and CEO Max Yasuda will make his annual address to employees on Monday afternoon.

Despite record profit and sales forecasts, TMC managing officer Takuo Sasaki said at a press conference that “the outlook, especially for emerging markets, is very unclear” and that the company was not planning to build any new factories in the short term.

Some overseas media outlets have suggested this freeze on factory expansion is locked in for the next three years – other than new facilities already announced for Thailand and Indonesia – but TMC has refused to confirm the reports.

“We need to stay vigilant of any adverse effect the recent financial instability may have on the real economy and auto markets,” Mr Sasaki was reported as saying in The New York Times.

“We will not build factories first and then wait for markets to materialise. We will consider expansion only when it becomes clear that production cannot possibly keep up with sales, and we are not there yet.” Toyota racked up 9.98 million worldwide sales for the 2013 calendar year, including deliveries from subsidiaries Lexus, Daihatsu and Hino, to maintain its position as the world’s top auto-maker. General Motors (9.71 million) and the Volkswagen Group (9.7 million) were in second and third place respectively.

Looking to achieve 10.32 million sales this year, Toyota has now increased its forecast operating profit for the financial year ending March 31, 2014, from ¥1.67 trillion ($A18.36b) to ¥1.9 trillion ($A20.9b).

This will surpass its previous record of ¥1.718 trillion ($A18.89b) set in the 2007/08 financial year, just prior to the global financial crisis.

TMC is certain to use the extra income to continue its global expansion, but for now is remaining quiet on whether it will continue to invest in its Australian manufacturing operations, which were thrown into a precarious position late last year when Holden followed Ford in announcing that it was closing down its factories by the end of 2017.

This will leave Toyota as the last remaining car-maker in Australia, putting further pressure on the company (and its local supply chain) as it attempts to wring $3800 from the cost of every car it builds at its Altona plant in Victoria to remain viable beyond 2018.

This process is currently being stymied by court action that has blocked Toyota Australia from seeking a vote by factory workers on variations to the current enterprise agreement – an appeal against the Federal Court’s decision is not due to be heard until May – and comes as the federal government-appointed Productivity Commission has recommended the abolition of all taxpayer assistance for the car industry by 2020.

TMC’s consolidated vehicle sales came in at 2.317 million last quarter, up from 2.113m over the same period a year earlier. Net income increased to ¥525 billion ($A5.78b), up from ¥99.9 billion ($A1.1b) in the previous third quarter.

Toyota experienced a slight drop in sales at its Asian business unit last quarter, but the Japanese domestic market rallied – up 64,167 units to 540,214 – and North America continued to be its strongest performer, up 60,000 units to 664,168.

Europe was also up 32,350 units, to 222,779, while ‘other markets’ (Central/South America, Oceania, Africa and the Middle East) increased for the three-month period by about 54,000 units to 467,897.

“In addition to the positive impact of the weaker yen, our operating income increased due to marketing efforts such as increased vehicle sales and cost-reduction activities through collaboration with our suppliers,” Mr Sasaki said.

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