Toyota Boosts Profit Forecast by 54%, Ignores Global Chip Supply Problems

Toyota Motor Corp said on Wednesday it had a stock of chips of up to four months and did not immediately expect a global chip shortage to hit production as it raised its profit forecast for the full year 54% more than expected.

Unlike other automakers, including Japanese peers Nissan Motor Co Ltd and Honda Motor Co Ltd, which had to cut production due to semiconductor shortages, Toyota increased production for the year ending in March.

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Shares of Toyota, the world’s largest automaker in terms of vehicle sales, closed 1.7% higher after reaching their highest level since July 2015.

“For the short term, we do not see any decrease in production volume due to the chip shortage, but we do see risks of chip shortages,” CFO Kenta Kon said in a briefing.

Kon said Toyota has heard that chip shortages around the world may continue until the summer, although the situation may be resolved sooner.

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Asked why the automaker sees limited impact compared to its competitors, Kon said Toyota consistently delivers its short-term and long-term production volume plans to suppliers.

The auto industry has struggled with a chip shortage since late last year, which in some cases was exacerbated by the former US administration’s sanctions on Chinese chip factories.

But the maker of the RAV4 crossover SUV and the Prius hybrid said it expects to sell 9.73 million vehicles this year, up 3.3% from a previous forecast of 9.42 million, but still down from 10.46 million last year.

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“The fact that Toyota is not largely affected by the chip shortage is an encouraging catalyst,” said Hideyuki Suzuki, managing director of investment research at SBI Securities.

For the fiscal year ending March 31, Toyota now expects a record operating profit of 2 trillion yen ($ 19.13 billion), well above an earlier projection of 1.3 trillion yen, and well above an average profit forecast of 1.542 trillion yen based on estimates from 23 analysts. , Refinitiv data showed.

The builder now expects the yen to trade at 105 yen against the US dollar, against a previous forecast of 106 yen.

Toyota said operating profit rose to 987.9 billion yen in the three months ended Dec.31, from an average profit of 565.51 billion yen from nine analysts polled by Refinitiv SmartEstimate.

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(1 USD = 104.5700 yen)

(Reporting by Eimi Yamamitsu; Additional reporting by Hiroko Hamada, Tim Kelly; Writing by Tim Kelly; Editing by Kenneth Maxwell and Christopher Cushing)