Sunday, December 4

Toyota Keeps Conservative Profit View on Supply Concerns


Toyota Motor Corp. stuck to its annual operating profit forecast, underscoring concerns over a persistent shortage of semiconductors and auto parts, as well as supply-chain disruptions, even as it reaped the benefits of the yen’s historic decline. The carmaker also unveiled a share buyback of as much as ¥150 billion ($1 billion).

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(Bloomberg) — Toyota Motor Corp. stuck to its annual operating profit forecast, underscoring concerns over a persistent shortage of semiconductors and auto parts, as well as supply-chain disruptions, even as it reaped the benefits of the yen’s historic decline. The carmaker also unveiled a share buyback of as much as ¥150 billion ($1 billion).

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Operating profit is on track to be ¥2.4 trillion for the fiscal year through March, Toyota said in a statement Tuesday, unchanged from its initial guidance and below analysts’ average estimate of ¥2.98 trillion. The world’s biggest carmaker also cut its production target for the year to 9.2 million vehicles from 9.7 million due to parts shortages.

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For the full year, Toyota raised its sales target to ¥36 trillion, compared with analysts’ estimate of ¥36.3 trillion and the company’s prior guidance for ¥34.5 billion.

The chip shortages, which stem from Covid-related lockdowns, have challenged the global auto industry, which also faces rising costs for materials and logistics, as well as other supply-chain disruptions. While the weak yen helps Japan’s carmakers boost the competitiveness of vehicles sold abroad and the value of repatriated earnings, they don’t get as much benefit as they used to because the weaker yen amplifies imported costs of raw materials and energy.

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“It’s still hard to tell what might happen with suppliers,” Bloomberg Intelligence analyst Tatsuo Yoshida said. “Although there’s less risk now, it’s possible that suppliers may suddenly warn of any issues.”

For the July-September quarter, Toyota reported operating profit of ¥563 billion, compared with analysts’ average projection for ¥765 billion. Its profit was ¥750 billion in the same period last year.

Revenue rose 22% to ¥9.2 trillion in the latest quarter.

Toyota shares fell after the results, declining as much as 2.1 percent. The share buyback will run from Nov. 2 through May 12, the company said.

Japan’s currency slumped to a 32-year low in October, and has weakened more than 22% against the dollar this year. Toyota has estimated that each one yen decline pushes its operating profit up by ¥45 billion. The carmaker revised its foreign exchange rate to ¥135 against the dollar from ¥130. The currency was last trading at around ¥148.

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Underscoring the chip shortage, Toyota said Thursday it will temporarily give new car buyers just one smart key instead of two as it seeks to ration semiconductors. The measure will apply to 14 models for sale in Japan, including Crown sedans, Prius hybrids and the battery -electric vehicle bZ4X, for production in November.

“It remains difficult to predict the future due to risks such as procurement of semiconductors,” Masahiro Yamamoto, accounting group chief officer said in a briefing.

Another headache for Toyota is a scandal at its truck and bus unit Hino Motors Ltd. over falsification of engine data that forced it to suspend domestic shipments. Hino said last week full-year operating profit will slump 82%. The manufacturer declined to issue net income guidance, saying it was unable to reasonably assess losses related to the scandal.

(Updates shares, buyback period in seventh paragraph, yen assumption in eighth.)

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