Toyota sees 1st profit drop in 5 years, earnings to fall again
Print Edition
TOYOTA yesterday reported its first drop in annual net profit for five years, while it unexpectedly warned that earnings would fall again owing to pricy US customer incentives and a forecast pickup in the yen.
The company’s top executive also repeated concerns that it was getting harder for Japan’s biggest automaker to keep profits buoyant as sales top out around 10 million vehicles annually.
The downbeat prediction underscores how the country’s automakers have relied heavily on a slump in the yen in recent years.
But the currency’s sharp gains in 2016 — largely driven by Brexit and tumbling world equity markets — took a bite out of Toyota’s latest results.
Yesterday, the Corolla and Prius hybrid maker warned it expected more forex pain, eating into profits again in the current fiscal year to March.
Meanwhile, customer incentives in the lucrative North American market hammered Toyota’s operating profit in the region.
US auto sales have been sputtering, forcing automakers to boost incentives to land customers — something Toyota’s top US executive has warned is unsustainable.
“Incentives are trending upward and competition is becoming extremely fierce,” Executive Vice President Osamu Nagata told a press briefing in Tokyo.
“We don’t want to get involved in excessive incentives.”
Overall, Toyota posted a net profit of 1.83 trillion yen (US$16 billion) on slightly lower revenue of 27.6 trillion yen in the recently ended year to March.
That is down more than 20 percent from a record 2.31 trillion yen net profit the previous year.
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