- Q2 profit of 562.7 billion yen vs. forecast of 772.2 billion yen
- It lowers its production target for the fiscal year from 9.7 million units to 9.2 million units
- It is not clear when the chip shortage will end – the executive
- If we take into account the positive factors, the results are “very ineffective” – analytical
- Shares fell 1.9%, while the Nikkei benchmark gained 0.3%
TOKYO, Nov 1 (Reuters) – Toyota Motor Corp ( 7203.T ) posted a worse-than-expected 25% drop in quarterly profit on Tuesday and cut its annual production target, as the Japanese firm grapples with rising material costs and persistent semiconductor wear and tear. deficiency.
The world’s biggest carmaker by sales also highlighted the strength of the business headwinds it faces, warning that it is difficult to predict the future after posting a fourth-quarter profit decline.
Toyota has done better than most automakers in managing its supply chains during the coronavirus pandemic, but this year it has fallen victim to a lingering chip shortage and repeatedly slashed its monthly production targets.
“We are out of the worst phase, but … it is not a situation where we are fully supplied,” said Kazunari Kumakura, head of Toyota’s purchasing group. “I don’t know when the chip shortage will be solved.”
Operating profit for the three months ended September fell to 562.7 billion yen ($3.79 billion) in a survey of 12 analysts by Refinitiv. Toyota reported sales of ¥749.9 billion a year ago and first-quarter profit of ¥578.6 billion.
Kumakura said global auto chip shortages persisted as chipmakers prioritized supplies for electronics products such as smartphones and computers, while natural disasters, COVID lockdowns and factory disruptions slowed the recovery of auto chip supplies.
He also said that the supply of old-style semiconductors, which currently attract little capital investment, will remain tight.
Toyota shares fell 1.9% amid the gloom, compared with a 0.3% rise in the Nikkei (.N225) average.
Some analysts were surprised by the performance, saying that other positive factors besides the lack of chips should be driving it.
“The yen is weaker in the second quarter, the volume in the second quarter is much higher than in the first quarter, and the (Covid-19) lockdown in China does not affect (the volume in the second quarter),” said Koji Endo, analyst at SBI Securities.
“Given these points … the absolute amount of profit in the second quarter should be higher than in the first quarter. It is not very impressive.”
Output rose 30% in the quarter, but the company warned last week that shortages of semiconductors and other components would continue to limit output in the coming months.
Toyota said it now expects to produce 9.2 million vehicles this fiscal year, down from the 9.7 million previously forecast but still up from production of about 8.6 million units last fiscal year.
Last month, Toyota told several suppliers it had raised its global target to 9.5 million vehicles for the current business year, hinting that the forecast could be lowered depending on the supply of electromagnetic steel sheets, Reuters reported.
THE NEW EFFECT OF SILENCE
The yen has lost about 30% against the U.S. dollar this year, but the benefit of a cheap yen — which makes exports more valuable — has been offset by rising input costs.
Toyota said a weak yen boosted profit by 565 billion yen in the first half of this fiscal year, but the gain was wiped out by a 765 billion yen increase in material costs, with the cheap local currency further pushing up import costs.
Toyota kept its conservative profit forecast, sticking to its full-year operating forecast of ¥2.4 trillion for the fiscal year to March 31 – well below the average analyst forecast of ¥3.0 trillion.
By comparison, South Korea’s Hyundai Motor ( 005380.KS ) increased its revenue and profit margin last month to reflect a currency gain.
Toyota, once a favorite of environmentalists for its hybrid gasoline-electric models, is also under the scrutiny of green investors and activists for its slow push toward fully electric vehicles (EVs).
Reuters reported last month that just a year into its $38 billion EV plan, Toyota is considering relaunching it to better compete in a market that has grown beyond its forecasts.
In a high-profile blow, Toyota earlier this year had to recall and halt production of its first mass-produced all-electric car after just two months on the market due to safety concerns. It started accepting leasing orders for the domestic market last month.
Toyota reiterated on Tuesday that battery-powered EVs are a powerful weapon for decarbonisation, but there are various other options to achieve the goal.
($1 = 148.3100 yen)
Reporting by Satoshi Sugiyama; Written by Miyoung Kim; Edited by Kenneth Maxwell
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