Toyota Motor estimates a 4.2% growth in its annual operating profit this year

By: Michael Harris
Michael Harris
Specialising in economics by academia, with a passion for financial trading, Michael Harris has been a regular contributor to… read more.
on Feb 8, 2020
Updated: Mar 11, 2020
  • Toyota Motor estimates a 4.2% growth in its annual operating profit this year.
  • Toyota says Coronavirus remains an uncertainty that is not currently factored in the forecast.
  • Toyota estimates its profit to hit 2.5 trillion yen this year.
  • Toyota's sales dropped in North America and Asia in the recent quarter.

In its announcement on Thursday, Toyota Motor highlighted that it expects a 4.2% growth in its annual operating profit this year. The company cited higher sales and better currency rates for the upbeat forecast. However, the company highlighted the recent coronavirus outbreak in China to be a factor of uncertainty that is currently not factored in the forecast.

The virus has so far caused over 550 deaths in China, following which, the local government has recommended suspension of business operations in an attempt to contain the virus. Temporarily halted operations in China are likely to weigh heavily on the global auto industry.

One-Half Of Components And Vehicles Usually Produced In China May Be Lost

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Analyst Vittoria Ferraris commented on the virus outbreak and estimated that as much as one-half of the components and vehicles that are usually manufactured in China are likely to be lost if business operations fail to return to normal in the upcoming days. The current suspension on the auto factories including that of Toyota’s is scheduled until February 9th.

In its guidance for full-year that ends in March, Toyota estimated its operating profit at 2.5 trillion yen that was reported to be in line with the experts’ forecast. In the previous year, the figure was capped at 2.47 trillion.

The company also forecasts 10.73 million units in the sale this year. In a previous estimate, Toyota had anticipated 10.7 million units. The estimate is based on an analysis of the forex market that sees Yen to average at 108 against the greenback this year versus 107 in the previous year.

At 654.4 billion yen, profit in the third quarter was reported 3.2 lower by Toyota. The automaker blamed softer vehicle sales and a stronger yen to have contributed to the decline, which nonetheless, came out better than what the analysts had expected.

Toyota Vehicle Sales Drop By 12.5% In The Recent Quarter

In the biggest market for Japan’s leading automaker, North America, sales were seen 1.8% lower in the recent quarter while Asia saw a significantly steeper 12.5% of decline in Q3 that was primarily attributed to falling demand in Thailand and Indonesia.

In a separate announcement, Toyota also highlighted that it plans to hold negotiations with the British government that has recently declared that petrol, diesel, and hybrid vehicles will no longer be up for sale in the United Kingdom by 2035.

Toyota’s performance in the stock market in 2020 is moderately upbeat so far with the company having gained around 5% in a little over a month.

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