By on May 11, 2011

In a packed conference room in downtown Tokyo, Toyota CEO Akio Toyoda announced this afternoon that Toyota finished the fiscal year to March 31, 2011 with a group net profit of  408.1 billion yen ($5 billion), up 95 percent on the year. This despite an ever increasing yen that is driving the company – and a lot of the Japanese industry – “to the limit” as CFO Satoshi Ozawa (above) warned. Sitting next to Toyoda, Ozawa said that he might have to recommend to his CEO to move production elsewhere unless a level playing field is created.

Ozawa put the impact of the March 11 earthquake and tsunami at  110 billion yen ($1.36 billion). However, the fiscal year had ended two weeks after the catastrophe. Financially, the worst is yet to come. Toyota appears to be in excellent financial and operational shape to weather a few quarters until production is back on line – which will happen earlier than expected.

More as I have worked through my notes. There will be some interesting morsels.

 

 

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21 Comments on “Breaking: Toyota’s Profit Nearly Doubles to $5 billion – Company Ready For Rough Road Ahead – Might Pack Up And Leave Japan If Yen Gets Stronger...”


  • avatar

    it’s the decreasing dollar that is the story not the increasing yen.

    • 0 avatar
      JJ

      I was about to comment on that…Seems very strange that the Yen is so strong, seeing as though that is usually a reflection on how the country is doing economically, especially if a big part of that economy (used to) depend on exports.

      Guess it’s just a sad testimony to the state of affairs in the US, Europe an most parts of the rest of the world.

      • 0 avatar
        highdesertcat

        No matter what the reasons, it is nice to see Toyota doing so well in spite of their past alleged problems and factual persecution by Ray LaHood and the US DOT. It makes me feel good that I recently converted from buying domestic to buying a foreign brand, and that it is a winner, not a company living large on taxpayer handouts, bailouts and nationalization. It has been suggested that GM should leave the US for greener pastures in China in order to make money and send the profits home to the US. I’m all for that.

    • 0 avatar
      wsn

      For the past year, Yen also gained over Euro and RMB.

      • 0 avatar
        L'avventura

        @wsn

        Global currencies have been doing whats called ‘competitive devaluation’ over the last year. Essentially, countries like China have been devaluing their currencies to keep pace with the weakening dollar so that their exports won’t be hurt. The Euro has also had its share of events that have lead to its weakening. Japan has avoided this move of weakening the yen much to the chagrin of Japanese companies.

        However, this “leaving Japan” thing is a bit of a joke. Japanese companies have already left Japan half a decade ago for exports, there has been a decreasing amount of Japanese-made cars for export even when the yen was week and Japan’s own QE was in full force.

        The biggest factor that has contributed to Japanese car companies leaving Japan is due to overseas expansion, and they build their global supply chain, especially in the developing world, they have alternative, as well as redundant, sources of supply of parts (this is crucial as the quake related supply constraints).

        Quite simply, the yen can’t be devalued enough to compete with that. A weaker yen will not change this tide.

  • avatar
    alluster83

    “sitting next to Toyoda, Ozawa said that he might have to recommend to his CEO to move production elsewhere unless a level playing field is created. ”
    A level playing field? this is so rich!! Toyota sells more than 1.5 million cars a year in Japan, which is virtually closed to foreign automakers and they are complaining about a level playing field!! Not to mention artificially devaluing the Yen and other subsidies provided.

    • 0 avatar
      JJ

      Troll?

      It’s been covered a bunch of times on this site in particular that this is a common misconception. The Japanese car market is open for foreign manufacturers but the Japanese are not buying them.

      Some of it might have to do with taxation on the basis of the width of the car but these are the same for their domestic manufacturers…Bertel can tell you some more about this.

      • 0 avatar
        wsn

        Well, I think it’s more of a product thing. Exactly what foreign cars expect to sell in Japan? First, not too many Japanese buy pickups. In terms of cars, why would a Japanese buyer buy a Malibu over a Camry there, when the latter out-sold the former even in the US? Or Aveo over Fit?

        It’s called home ground advantage. The guest team must be much better to win. Accord/Civic/Fit are much better than Malibu/CavalierCobaltCruze/Aveo.

      • 0 avatar
        charly

        Does a Japanese buyer buy a Camry? I know that they aren’t sold in Europe

  • avatar
    alluster83

    Q1 sales, GM is ahead by 430,000 Units

    “For the January-March period, Toyota sold 1.79 million vehicles worldwide. That is fewer than the 2.22 million vehicles GM sold and fewer than No. 3 automaker, Volkswagen AG of Germany, at 1.99 million. ”

    http://www.msnbc.msn.com/id/42984741/ns/business-personal_finance/

  • avatar
    Tstag

    Toyota also threatened to pull out of the UK if we didn’t join the Euro….

  • avatar
    obbop

    The ruling class masters, the deserving ones, may they garner TOTAL CONTROL and as required by Social Darwinism place us masses of mere commoners below their near-gawd-like feet.

    Even those of you convulsing with delight at thine relatively high position upon the socio-economic hierarchy…

    Is your lofty position really THAT secure?

    Would an effective search be unable to find, let’s say, perhaps 300,000 others located across the planet with your abilities/skills/knowledge/ etc?

    What if those 300,000 placed a bid to take your job?

    Oh, Daddy owns the company?

    Oh… he doesn’t.

    And those paying your wage have a neutral view of you?

    Loyalty for past work well-done not present?

    Parameters, subjective rationales are often involved; too many to factor in here and the present non-algorithm requires a general what-if scenario.

    Basically; nobody is irreplaceable and that brilliant younger lad in the Mubai slum will gladly work near-endlessly and near-tirelessly for 1/100th your pay and benefits? Not required!!!!

    There’s 299,000 others clamoring for the job.

    The many nose-in-the-air lads and lasses may receive their comeuppance some day.

    And a horde of working-poor will chortle, and I would not vie with them for dumpster contents.

    That is one fight you socio-economic higher-ups will likely lose.

    • 0 avatar
      wsn

      –”What if those 300,000 placed a bid to take your job?”

      Then place a bid on a better job.

      –”Loyalty for past work well-done not present?”

      Write your expectations in your contract.

  • avatar
    Bridge2farr

    “TOKYO (AP) – Toyota’s quarterly profit crumpled more than 75 percent after the March earthquake and tsunami wiped out parts suppliers in northeastern Japan, severely disrupting car production.”
    “Toyota Motor Corp. reported Wednesday that January-March profit slid to 25.4 billion yen ($314 million) from 112.2 billion yen a year earlier. For the fiscal year ended March 2011, Toyota’s earnings doubled, showing that the Japanese automaker had been on the way to recovery from its recall crisis when the magnitude-9.0 earthquake struck on March 11.

    Then what is this from the AP?

    • 0 avatar
      Quentin

      $5B is the fiscal year profit, which was up nearly double from the previous fiscal year. Their quarterly profit tumbled 75%. You can having a losing or weak quarter and still be profitable for the fiscal year. A country crushing earthquake and tsunami can have that sort of impact on a fiscal year that was otherwise a huge recovery from the year before.

    • 0 avatar

      Those who complain about bias and axes to grind may want to be on a lookout for this kind of selective reporting. The March 11 earthquake and tsunami affected exactly two weeks of a quarter that has 12. If these two weeks cost you $1.36 billion – as stated in the numbers presented, then no wonder that this quarter took, well, a hit.

  • avatar
    Glenn Mercer

    I agree with those commentators arguing that the failure of American OEMs to penetrate Japan is not due to Japanese governmental opposition. It might be we make the wrong products for Japan, it might be nationalistic bias on a personal level, it might be lack of real effort on the OEMs’ part, it might be sunspots for all I know, but I do not see institutional/governmental/regulatory barriers in Japan against foreign cars. Look at these analogies: European OEMs as a group have about a 5% share in Japan, and about a 5% share in the USA (the data experts at TTAC will correct my numbers I hope). So whatever barriers there are against European sales in both countries might be assumed to be similar… implying, if one thinks the USA has no regulatory barriers against the Europeans, neither does Japan. Also, I note that American exports to Europe have done atrociously poorly (yes, I know, Ford and GM have European divisions dedicated to building cars for local consumption, so the export drive from the USA could hardly be considered forceful), but I rarely hear complaints about the Europeans “closing the market” to the Americans. For really impressive regulatory barriers against imports from abroad, look at KOREA’s handcuffs on Japanese cars (I know, many of those rules are now dissolved). I just don’t see the argument for Japanese government-imposed barriers to American exports. I could be wrong, it has happened once or twice in the past (grin)…

    • 0 avatar

      Please name the barriers to entry.

      - The tariff for cars is zero. ZERO.
      - The cars must comply with Japanese regulations, just like a car imported to the U.S. has to comply with U.S. regulations.
      - However, Japan has exemptions for low volume imports. Europe has similar regs. The U.S. does not.

      Failure? Doesn’t exist. It must be discrimination.

  • avatar
    Glenn Mercer

    And (echoing Mr. Schmitt’s last comments): the US tariff on imported cars I think is still 2.5% (in Japan zero), and on pickup trucks 25%, yes? What is a 25% tariff on imported pickup trucks in the USA if not a protectionist barrier, on the part of the USA? I agree wholly with Mr. Schmitt.


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