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Toyota profit takes a hit on yen woes

Sales struggle: Toyota’s marketing costs in North America jumped last financial year as the company fought to maintain its market share, impacting on profit from the region.

Global sales up but profit down as Toyota wrestles with strengthening yen

10 May 2017

TOYOTA Motor Corporation has blamed unfavourable exchange rates and higher expenses for a 30 per cent slump in its operating income for the 2016-17 financial year, despite a 1.5 per cent rise in its global vehicle sales to 10.25 million units.

The company has warned that it expects its vehicle sales to flat line in the next 12 months, impacting global revenues and cutting operating income by a further 20 per cent.

In its annual financial year-end statement released today in Tokyo, the Japanese giant reported that its net revenue fell 2.8 per cent in the financial year ending March 31, to 27.6 trillion yen ($A329 billion).

TMC executive vice president Osamu Nagata said this would have translated into 120 billion yen ($A1.43b) gain in operating income except for a 940 billion yen ($A11.2b) hit from exchange rate fluctuations and a 530 billion yen ($A6.3b) jump in expenses.

Toyota’s operating income of 1.99 trillion yen ($A23.8b) represented a fall of 859 billion yen ($A10.5b). After tax, the net profit was 1.83 trillion yen $A21.8b), a fall of 20.8 per cent on the same period of 2015-16.

While Toyota was operating on an exchange rate of 120 yen to the US dollar in the previous financial year, the 2016-17 average was 108 yen to the dollar – a gain of 10 per cent. Yen exchange rates with the Euro took a similar hit.

According to its forecasts for the current financial year, Toyota is working on an exchange rate of 105 yen.

The Forex heat was felt strongly in Toyota’s home market of Japan where, despite a strong 10 per cent growth in sales, operating income dived 28 per cent.

In North America – Toyota’s biggest market – sales slipped marginally, to 2.8 million units, but operating income fell 34 per cent as the company threw money at marketing to maintain volumes.

While Japan and the US returned a profit for Toyota, Europe slumped to a loss of 11.8 billion yen.

Sales were down by 246,000 units in the zone that includes Australia, to 1.34 million, taking the profit in the region down by almost 40 per cent.

However, Toyota Australia held up its end of the sales operation, delivering 209,610 vehicles in the calendar year – a rise of 1.6 per cent.

Consolidated global sales of Toyota and Lexus-branded vehicles achieved 8.97 million in 2016-17, compared with 8681 the previous financial year. When sales of Toyota-owned Daihatsu and Hino vehicles are added, the tally jumps to 10.25 million in 2016-17, up from 10.09 million in the previous 12 months.

Volkswagen Group is claiming a win in 2016 calendar year sales, saying its brands collectively achieved 10.3 million sales.

TMC’s board a year-end dividend of 110 yen per share, making a 210 yen return for the year.

It also announced that it would buy back 50 million shares.

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