A man looks at vehicles of Japan's auto giant Toyota Motor at the company's head office in Tokyo - AFP
AFP: Toyota said Friday its annual profit accelerated 19% to a record $ 18.1 billion as the world’s biggest automaker capitalised on a weak yen and strong demand in North America, despite being sideswiped by a series of recalls.
The maker of the Corolla and Prius hybrid beat its earlier forecasts with the ¥ 2.17 trillion net profit ($ 18.1 billion) in the fiscal year to March, as revenues rose 6% to ¥ 27.23 trillion yen.
The Japanese giant predicted that, despite weakness in Asia and industry concerns about growth in major market China, it would book an even bigger ¥ 2.25 trillion net profit for the current business year.
Toyota’s operating profit rose 20% – largely owing to cost cuts and a sharp decline in the yen, which inflates the value of exporters’ repatriated profits – even as sales edged lower to 8.97 million units. Including its Hino and Daihatsu brands, Toyota moved a slightly higher 10.16 million units for the year.
President Akio Toyoda put the jump in operating income down to “favourable foreign exchange rates and cost reduction efforts that more than offset negative factors such as decreased vehicle sales and increased expenses, including the investments to enhance our future competitiveness.”
Sales to North America and Europe rose, while they turned down in Asia and in Japan after the government hiked sales tax in 2014 for the first time in 17 years, a move that hammered consumer spending.
Toyota has been focusing more attention on squeezing out productivity gains and better using existing plants – it put on hold building new factories for several years.
The Japanese carmaker began operating a new Thai plant in 2013, but since then it has halted investment as the global car market has struggled with oversupply and weak demand.
Last month, the company announced it was ending the construction freeze as it unveiled plans for a $ 1.0 billion plant in rising industry power Mexico and another production line in China.
Toyota has also said it will overhaul its production methods, vowing to slash development costs and describing the shake-up as crucial to navigating “sudden and drastic changes” in the auto sector.
“The weak yen has had a big impact on Japan’s auto industry and strong demand in North America also benefited the industry, offsetting stagnant markets such as Japan,” Marusan Securities Auto Analyst Hiroaki Mochida told AFP.
“But recalls will remain a potential serious risk at a time when the use of common parts is a global trend.”
Toyota is working to recover its reputation for safety after the recall of millions of cars globally for various problems, including an exploding air bag crisis at embattled supplier Takata, which posted an annual loss on Friday.
Rival Honda last month said its fiscal-year net profit fell 8.9% as it grapples with soaring recall-related costs, including from the Takata airbag crisis which has been linked to at least five deaths.
The air-bag affair has sparked the recall of more than 20 million vehicles worldwide by 10 major automakers.
Japan’s number two car company Nissan reports its financial results next week.
As part of moves into growing markets, Toyota is tapping demand for environmentally friendly cars, especially in China where the government is struggling to contain an air pollution crisis.
Toyota has said it was swamped by domestic orders for its first mass-market hydrogen Mirai fuel-cell car, while it has also announced plans to develop components for hybrid vehicles with two Chinese automakers in an unprecedented technology-sharing deal.
The agreement marked a shift away from Japanese carmakers’ traditional reluctance over such deals for fear of losing their competitive edge.