Toyota improves earnings outlook for the full year due to weaker yen and improved sales in China

Toyota Motor Co. (T) posted slightly weaker earnings than expected for its second fiscal quarter on Tuesday, but said that a weakening of the yen, accelerated cost reduction and improved markets in China and in North America should boost profits for a full year.

Toyota, the largest automaker in the world, said its operating profit for the three months ended September rose 11 percent to 579.1 billion yen ($ 5.11 billion) as Global net revenues had jumped from 2.35% to 7.35 billion yen. However, while Q2 earnings were slightly below expectations, Toyota lowered its dollar / yen exchange rate forecast for the second half of its fiscal year, which ends in March, and raised its earnings outlook for the first quarter. whole year 4.3% to 2.4 billion yen, although it remains unchanged, unit sales forecasts remain unchanged at 8.9 million.

"We are progressing steadily towards achieving our goal of cost reduction," said General Manager Masayoshi Shirayanagi. "In order to achieve this goal by the end of this fiscal year and continue to strengthen our earning capacity, we will accelerate our operations during the second half of the current fiscal year in all regions."

Toyota shares closed up 2.09% in Tokyo, to 6,630 yen (Tuesday), which reduced their annual decline to about 8.1%, against 14.1% for their rival Honda Motor Co. and 18.66% for Mazda. Motor Corp. (MZDAY).

Toyota has reduced to 110 the exchange rate expected for the yen against the US dollar, to 106 levels at the end of the first quarter of July profits. From July to September, the yen lost 2.73% against the dollar and is currently trading at around 113.25

According to Toyota, worldwide sales increased slightly by 2% to 4.42 million, while sales in Asia grew 9.2%, thanks to a 20% increase in China, where the automaker seems to have resisted the trend of slower growth in the world's largest car market.

The Chinese car market shows persistent signs of weakness in the face of the impact of the US-China war. Car sales fell 11.6% in September to 2.39 million units, the largest decline in at least seven years, according to official China Association data. car manufacturers.

Ford Motor Co. (F) as well as General Motors (GM) could also be vulnerable to any disruption of the supply chain in China if Beijing – or President Donald Trump – increased the stakes of their current trade stalemate that has "More than $ 300 billion worth of goods." Data from the US International Trade Administration showed that US automakers had imported $ 18 billion worth of auto parts from China. last year, including nearly one-third of all brake system components.