New Telegraph

Toyota profit soars despite pandemic, semiconductor shortage

Toyota Motor Corp. smashed earnings records across the board in the latest fiscal year, racking all-time highs for revenue, operating profit and net income even as it battled the ongoing COVID-19 pandemic and global semiconductor shortage. Operating profit climbed 36 per cent to 3 trillion yen ($24.61 billion) in the fiscal year ended March 31, topping the previous high from the fiscal year ended March 31, 2016.

 

Toyota booked a robust operating profit margin of 9.5 per cent, up from 8.1 per cent the year before. In announcing its earnings results this week, the world’s largest automaker said full fiscal year net income increased 27 per cent to $23.38 billion, while revenue grew 15 per cent to $257.42 billion. Both those totals chalked new records for Toyota as well.

Global sales advanced 7.6 per cent to 8.23 million vehicles in the fiscal year.

The consolidated sales figure covers deliveries for the Lexus and Toyota brands, as well as Daihatsu and Hino. Toyota slashes production plans Worldwide retail sales increased 4.7 per cent to 10.38 million vehicles in the 12-month period.

 

In the just-finished fiscal year, Toyota expanded its profits despite soaring costs for raw materials and logis-tics as well as increased expenses for labor, R&D and depreciation. A tailwind from beneficial foreign exchange rates and lower marketing costs helped offset the cost surge. Regional operating profit increased in virtually every major market worldwide.

Bearish outlook

 

Looking to the future, however, Toyota was not as confident. The ever-conservative automaker forecast that operating profit and net income will retreat in the current fiscal year ending March 31, 2023, even as it eyes record retail sales. Toyota expects raw material costs to more than double from the total hit last year.

 

And the outlook is further clouded by uncertainty over inflation in markets such as the U.S., lingering semiconductor supply chain woes, pandemic lockdowns in China and the ongoing war in Ukraine.

 

“These factors will be compounded,” Chief Communications Officer Jun Nagata said. “This fiscal year, it’s going to be even more difficult than other years to make a forecast.” Toyota will do its best to shelter suppliers from raw material price increases by absorbing the extra cost, CFO Kenta Kon said.

 

The company will also be judicious about passing on the cost to customers through higher sticker prices, executives  said. While there are some vehicles and regions that might accommodate price increases, other markets and models will not. Executives declined to offer more details. But Nagata said Toyota’s strength is being a full-lineup player that can offer everything from economical compacts to luxurious SUVs.

The company has an offering in just about everybody’s price range, even in an era of inflation, he said. Holding the line like that is expected to tamp down profits. Toyota expects operating profit to slip to $19.69 billion in the current fiscal year, as net income falls back to $18.54 billion.

 

But at the same time, Toyota also expects global retail sales to expand 3.1 percent to 10.7 million. If achieved, that would post another record for the automaker. Toyota eked out a 6.2 per cent increase in global output to 10.06 million units in the just-finished fiscal year as it ramped up factories to cover lost output from the previous two fiscal years.

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