Toyota sees profit slump

Toyota saw global operating profit fall by 43 per cent in the latest quarter, as foreign exchange losses and an overreliance on passenger cars offset gains from rising sales and cost cutting. Automotive News reports operating profit declined NZ$6.36 billion in the fiscal second quarter ended September 30, while net income fell 36 per cent to NZ$5.28 billion in the July-September period. While global sales rose 2.5 per cent to 2.5 million vehicles, Toyota’s global revenue decreased by 8.8 per cent to NZ$95 billion. Chief executive Takahiko Ijichi says fluctuating foreign exchange rates and a flattening US market undermined earnings. Regional operating profit in North America fell 5.9 per cent to NZ$1.87 billion in the quarter. The carmaker was also slow to react as demand in the US shifted from passenger cars to light trucks, following low petrol prices and changing consumer tastes. Ijichi said of Toyota’s truck lineup that “supply has not kept up with demand”. Toyota has reined in its sales forecast for North America to 2.83 million vehicles, down from its original plan to sell 2.88 million. The new target is a 0.6 per cent drop from the previous year. But the marque says it was able to offset incentive and marketing cost increases in North America by cutting costs elsewhere, limiting its profit decline. Toyota has lifted its forecast for the current fiscal year ending March 31, 2017, citing more aggressive cost cutting and the adoption of a more lenient foreign exchange assumption. Operating profit is now forecast to fall 40 per cent to NZ$22.76 billion, up from the NZ$20.66 billion previously forecast. Toyota’s net income outlook is also expected to be NZ$20.76 billion, up from the earlier target of NZ$19.43 billion, but this still represents a 33 per cent fall from last year’s result. Toyota has also cut its global sales forecast by 50,000 vehicles. Worldwide volume is now forecast at 10.1 million vehicles.