Toyota Financial Results Impress With Profit Soaring 50%

By Mariliana Fotopoulou Wednesday, February 10, 2021

Shares of Toyota Motor Corp closed 1.7% higher in Tokyo today after the car company presented better-than-expected business results for the Q3 through December 2020.

A Toyota dealership.

Impressive Performance in the Challenging Environment

The car company said its business earned ¥838.7 billion ($8.01 billion) that is around 50% higher compared to ¥559.3 billion ($5.34 billion) reported for the end of 2019. The operating profit of the business surged to ¥987.9 billion ($9.44 billion) to easily beat the ¥565.51 billion ($5.40 billion) expected from the surveyed analysts.

On the back of a strong performance in Q3, the company was able to upgrade its full-year guidance as it now projects net profits of ¥1.90 trillion ($18.14 billion) for the fiscal year to end-March. On a previous occasion, the car company said it expects to finish the year with ¥1.42 trillion ($13.55 billion) in net profits.

As the car business crutches analysts’ Q3 and full-year expectations, analysts were obviously impressed with the results of the car company.

“In a tough business environment, Toyota is outperforming its rivals. Japan’s auto industry showed a steady performance as major markets are recovering from the negative impact of the new coronavirus globally,” Satoru Takada, an auto analyst at research and consulting firm TIW, said.

During a call with investors, the senior management of the company was facing questions surrounding the shortage of semiconductors that is hampering companies worldwide to yield a higher production output.

“For the near term, we do not see any decrease in production volume due to the chip shortage, but we do see risks of a chip shortage,” Chief Financial Officer Kenta Kon said during a briefing.

“The chip shortage has hit wide-ranging industries around the world and is expected to last at least until the end of March. But the impact on Toyota appears limited, compared to those on its rivals and other companies,” Yasuo Imanaka, the chief analyst at Rakuten Securities, commented.

Similarly, Nissan and Honda car business also raised their full-year profit forecast as quarterly profit increased significantly.

Summary

Toyota reported better-than-expected quarterly earnings that paved the way for a higher full-year profit guidance.

About the Author


Headshot of Mariliana Fotopoulou

Mariliana has an MSC in Consumer Analytics and Business Strategy. She has a special interest in fast-moving industries and Big Data.

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