Toyota shrugs off pandemic and chip shortage as quarterly profit nearly doubles

TOKYO — Toyota shrugged off the pandemic slump and global microchip crunch to nearly double its operating profit in the latest quarter and book a nine per cent profit margin on rebounding sales.

Toyota Motor Corp.’s operating profit surged to 689.8 billion yen (US$6.26 billion) in the fiscal fourth quarter ended March 31, from 359.9 billion yen the previous year, CFO Kenta Kon said Wednesday while announcing the company’s fiscal full-year earnings.

The results delivered a robust nine per cent operating profit margin for the most recent quarter, up from 5.2 per cent a year earlier, as Toyota fortified its bottom line despite the global headwinds.

The world’s biggest automaker also said net income more than doubled to 777.1 billion (US$7.05 billion) in the January-March quarter, from 327.3 billion (US$2.97 billion) the year before.

Revenue increased 11 per cent to 7.69 trillion yen (US$69.79 billion) in the three-month period, as worldwide sales advanced 5.3 per cent to 2.21 million vehicles. North American sales added 5 per cent to 630,000 units in the period, while sales in Europe grew 11 percent to 280,000 units.

Toyota’s business got a big boost from cost reduction as well as from a higher volume and a better mix of more profitable vehicles, which offset losses from unfavorable foreign exchange rates.

North America’s regional business swung back to an operating profit in the latest quarter, after posting an operating loss the year earlier. Operating profit in Europe more than doubled.

Finance chief Kon said the effect of the microchip shortage was kept in check by careful supply chain management. He forecast that Toyota would experience little serious disruption going forward.

“Do we foresee any major impact? No,” Kon said. “But we do not think we can rest and be relaxed.” He said Toyota’s sales forecast for the current fiscal year ending March 31, 2022, is a conservative one that takes into account the risk of possible supply interruptions.

Looking ahead, Toyota forecast that its global sales would rebound 14 per cent to 8.7 million vehicles in the current fiscal year. North American sales were pegged to grow 18 per cent to 2.72 million vehicles, and European deliveries were seen increasing 15 per cent to 1.1 million.

On a retail basis, Toyota expected worldwide volume to expand 6.4 per cent to 10.55 million.

“Sales units are expected to recover significantly for the fiscal year, and that is indeed a very major factor supporting this projection,” Kon said. 

Toyota said it would pump a record 1.16 trillion yen (US$10.5 billion) into R&D in the current fiscal year ending March 31, 2022 — an amount representing about 3.9 per cent of anticipated sales. The increase will go largely into supporting Toyota’s electrification push.

For the full fiscal year — a chaotic stretch marked by the COVID-19 pandemic upheaval and supply chain tumult due to the worldwide shortage of microchips and bottlenecks in resin production and global shipping — Toyota saw operating profit dip but still kept healthy margins.

Toyota full-year operating profit shed just 8.4 per cent to 2.20 trillion yen (US$20 billion) in the 12 months ended March 31, for a margin of 8.1 per cent, the company said on Tuesday.

Net income increased 10 per cent to 2.25 trillion (US$20.4 billion) in the fiscal year.

Revenue declined 8.9 per cent to 29.87 trillion yen (US$271.1 billion). Worldwide sales retreated 15 per cent to 7.65 million vehicles.

Toyota’s robust results contrast with those of other Japanese automakers reporting earnings so far this week.

Toyota-affiliate Subaru Corp. reported that its full fiscal year operating profit plunged by half.

Meanwhile, Mitsubishi Motors Corp. slumped into the red for the full-year, and the red ink at partner Nissan Motor Corp. expanded to the company’s biggest-ever operating loss.

Honda Motor Co., which reports its earnings May 14, has projected an 18 per cent slump in fiscal-year operating profit.

And Mazda Motor Corp., which reports the same day, revised its outlook on Wednesday to warn that its full-year operating profit is expected to plunge 80 per cent.

In forecasting the profit outlook for the current fiscal year, Toyota predicted that the rebound in global sales will underpin a 14 per cent increase in operating profit and drive a modest 2.4 per cent increase in parent-company net income.

Revenues are expected to reach near record levels at 30 trillion yen (US$272.26 billion), just shy of the all-time high of 30.2 trillion (US$274.07 billion) in the fiscal year ended March 31, 2019.

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