A surge of profits was felt by Toyota Motor Corp. in the latest quarter as it benefited from huge sales in North America and from substantial foreign exchange gains, leading to record earnings for the full year. For the fiscal fourth quarter that ended March 31, the operating profit increased by 46% to 635.7 billion yen ($5.31 billion).
In comparison, Toyota reported 436.1 billion yen ($3.65 billion) the previous year during the same period. Meanwhile, the automaker’s net income increased by over half to 446.4 billion yen ($3.73 billion) from the previous year’s 297.0 billion yen ($2.48 billion). In the latest quarter, its global revenue rose by 8.4% to 7.12 trillion yen ($59.52 billion) even when its global retail sales decreased by 2.4% to 2.542 million vehicles.
President Akio Toyoda believes that these gains were because of the depreciation of the yen as well as cost-cutting measures. He also said that the automaker will embark on a new age of expansion after having taken a pause on new plant construction for three years. Toyota will be starting this offensive during the second half of 2015 with the debut of the first model built on its new modular product platform.
Among the plans through 2020 are a new plant in Mexico and a fresh line in China. Toyoda added that 2015 is “an important turning point” as the company transitions from the intentional pause stage to the execution stage. He said that this will prove “how strong Toyota has become.”
From January to March of this year, the automaker has performed very well in North America as sales there were able to offset the declines in Asia, including Japan. Consumers have been shifting to vehicles that weren’t so frugal and Toyota was prepared with its lineup of SUVs, trucks, and crossovers. In the fiscal fourth quarter, the brand’s sales in the U.S. (which is its largest market) grew by 7.1% with 607,000 units sold.
Its Japan sales declined by 14% to 626,000 units. Meanwhile, European sales climbed 5.1% to 225,000 units during the first quarter. Also helping the bottom line was the increased demand for higher-margin trucks in markets like the United States. Regional operating profit increased by 72% in North America to 88 billion yen ($735.6 million) in the fiscal fourth quarter compared to previous year.
However, Japan still is Toyota’s primary profit engine, with the depreciating Japanese yen raising regional operating profit by 23% to 427.8 billion ($3.58 billion) during the quarter. The operating profit in Europe fell by 3.3% to 14.6 billion yen ($122.0 million) in the quarter. These strong results are proof of how Toyota feels the impact of exchange rates.
Japanese automakers have benefited during the past year from the weakening yen as the Japanese government seeks an ultra-loose monetary policy that may jumpstart the economy.
The automaker has yet to provide a breakdown of gains from foreign exchange changes during the fourth quarter. However, Toyota’s operating profit for the fiscal year that ended March 31, 2015 was pushed up by a 280.0 billion yen ($2.34 billion) windfall gain from the weaker yen.