TOKYO – Toyota Motor barely made a profit in the last quarter despite falling sales as a result of the COVID-19 pandemic and expects to be in the black for the full year.
Toyota’s relatively robust results are due to the fact that virtually all major Japanese companies – Nissan, Honda, Subaru, Mazda and Mitsubishi – experienced quarterly operating losses from April to June.
Toyota bucked the trend, but operating profit was almost lost, falling 98 percent to 13.9 billion yen ($ 129.4 million) in the automaker’s first quarter that ended June 30.
When it announced its results on Aug. 6, Japan’s largest automaker announced that its net income for the period fell 74 percent to 1
In the two previous fiscal years prior to the COVID-19 outbreak, Toyota’s quarterly operating income was consistently between $ 500 billion and $ 700 billion ($ 4.7 billion to $ 6.5 billion).
Global retail sales fell 32 percent to 1.85 million vehicles from April to June, including the results of the Daihatsu subcompact subsidiary and the truck subsidiary Hino. The global wholesale volume fell by 50 percent to 1.16 million vehicles.
Toyota’s slump is due to the COVID-19 pandemic hammering profits across the industry.
Cost cuts coupled with lower labor costs and reduced R&D spending at Toyota helped offset the decline in sales as the global slowdown forced factories and dealers to shut down.
A faster-than-expected upswing in China also helped Toyota write in the black. Operating income in China actually increased from April to June as sales increased 14 percent.
Toyota halted production at plants around the world in response to government regulations intended to restrict transmission of the coronavirus. And even in areas with fewer constraints, Toyota has scaled back production to match falling demand to forestall huge inventory levels.
Toyota’s factories in China, the epicenter of the global outbreak of coronavirus, resumed normal operations on March 30, but most of the factories in other regions resumed operations in May.
Toyota’s key North American operations reported a regional operating loss of 97.7 billion yen ($ 909.8 million) in the reporting period, as regional wholesale volume decreased 62 percent to 285.00 units.
In Europe, the wholesale volume fell by 50 percent to 141,000 vehicles in the last quarter. Europe also had a quarterly regional operating loss of 19.7 billion yen ($ 183.4 million).
Looking ahead, Toyota said earnings forecasts may continue to change due to continued uncertainty about the pace of the pandemic recovery and the risk of a second wave of outbreaks. As a result, Toyota projected that fiscal year-end operating profit will decrease 79 percent to 500 billion yen ($ 4.7 billion) for the current fiscal year ended March 31, 2021, while net profit is expected to decrease 64 percent to 730 billion yen (6.8 billion yen US dollars) will decrease. Sales are down 20 percent to 24 trillion yen ($ 223.5 billion).
Global wholesale deliveries are expected to decrease 20 percent to 7.2 million vehicles, with declines being seen in nearly all major regions.
North American volume is expected to decrease 14 percent to 2.33 million vehicles, while European wholesale is expected to decrease 16 percent to 870,000 units.
Global retail sales are expected to decline by 13 percent to 9.1 million vehicles in the fiscal year by March 31, 2021, after 10.46 million vehicles in the previous year.