The suspense-filled wait for Toyota Motor Corp’s first quarter profits is finally over. Some expected (hoped?) that ToMoCo would pay dearly for the recalls. Others consulted their crystal ball that said that Toyota might have netted more than a billion US in the first quarter. They were all wrong. Way off the mark. Not even on the same planet.
According to a communiqué sent out today by Toyota, net income increased from a loss of 77.8 billion yen in the same quarter last year to 190.4 billion yen this year. That, ladies and gentlemen, equates $2.2b in today’s dollars. According to The Nikkei [sub], the reasons for all that profit are “recovering sales at home and abroad,” along with “the company’s efforts to slash costs,” and last but not least “a operating profit of 211.6 billion yen” ($2.47b). Where does all that money really come from?
- Japan, operating loss of 27.5 billion yen (-$320m)
- North America, operating income of 109.7 billion yen ($1.28b)
- Europe, operating loss of 6.8 billion yen (-$80m)
- Asia, operating income of 90.2 billion yen ($1.05b))
- Central and South America, Oceania and Africa, operating income of 41.0 billion yen (-$480m)
- Financial services, operating income of 115.1 billion yen ($1.34b)
The biggest source of income of Toyota is North America, followed by “Asia.” Toyota needs to get stronger in China to shelter itself from possible additional U.S. fallout. The very biggest source is Financial Services, which wasn’t even included in the operating profit of 211.6 billion yen. (And in case you are nitpicking: The table is missing 5 billion yen.)
Financial Services is a high margin business for any auto maker, it’s hard to live on cars alone without a captive financing arm. TMC made all that money in banking due to “a large decrease in the costs related to loan losses and residual losses in Financial Services,” as TMC Senior Managing Director Takahiko Ijichi explained
For the rest of the 2011 fiscal year, which runs from April to March the next year, TMC very cautiously revised its consolidated vehicle sales from 7.29m to 7.38m units, a mere increase of 90K units more than announced in their May 2010 forecast. For the full fiscal year, TMC likewise cautiously up-revised it’s expected net income to 340 billion yen ($4m), a smidgen of an improvement over the 310 billion yen predicted in May.
For the rest of the year, Ijichi struggles with ” a lack of visibility concerning currency movements and the possible backlash in demand after the end of the demand-stimulus programs in Japan.” That’s bean counter-speak for “we have no idea, but we are worried.” Better worried now than caught flatfooted later.