Weak yen leads to record profits for Toyota for April-June 2015

Article by Christian Andrei, on August 1, 2015

Toyota Motor need not despair even after giving up its title as the biggest automaker in the world as it was able to outdo its top two competitors when it comes to profits. Because of windfall currency gains, Toyota was able to report a 9.1% climb in operating profit to ¥756 billion ($6.16 billion) in the April-June period, its fiscal first quarter.

In this same period, Volkswagen AG posted a $3.85 billion operating profit while General Motors had a $1.3 billion operating profit. VW was able to take away the top spot in global sales from Toyota. For the first six months of 2015, VW said that it sold 5.04 million vehicles. It had a 20,000-unit lead over Toyota, which sold 5.02 million vehicles.

The gap is very slim. Toyota’s Camry sales figure in the U.S. is higher than this number. GM is in third place, with 4.86 million vehicles sold in the first half. In the latest quarter, Toyota posted record operating profit and revenue for any first quarter. For the first quarter, it recorded a net income of $5.27 billion, a 10% increase.

Revenue went up 9.3% to $56.94 billion. Toyota was able to achieve a massive profit even with decreasing sales due to the big windfall from favorable currency rates. Its global retail volume declined by 11,000 units to 2.502 million in the quarter, weakened by the slow demand in Japan and Asia.

The decline of the yen against the dollar boosted operating income by $1.43 billion, even when this figure was reduced by $244.5 million by swings in the yen's exchange rate against other currencies. The operating profit would have decreased if there was no tailwind.

Due to the currency impact, Toyota experienced a 30% increase in regional operating profit in its export-reliant Japan operations. This led to a robust operating-profit margin of 14%. Meanwhile, in North America, it only got a 5.3% operating-profit margin, with regional operating profit rising slightly by 0.9% to $1.23 billion.

In the same quarterly period, Toyota’s wholesale deliveries in North America (the brand’s largest market) increased by 2.7% to 729,000 vehicles. In every other region, there was a drop in wholesale deliveries.

Toyota raised its forecast for wholesale deliveries for Japan, North America and Europe for the full fiscal year ending March 31, 2016.

However, Toyota maintains that factory sales in these markets will drop compared to the previous year with the exception of North America and Japan. In addition, the automaker continues to believe that retail sales will fall to 10.15 million in the present fiscal year, from a record 10.168 million the previous year.

Topics: toyota, sales, japan

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