Toyota Motor Corp. (TM) posted a profit of ¥408.18 billion ($5.07 billion) or ¥130.16 ($1.60) per share for its fiscal 2011 ended March 31, 2011 that almost doubled from ¥209.46 billion or ¥66.79 per share a year ago.
The increase in profit was attributable to positive impact of ¥490.0 billion due to marketing efforts and ¥180.0 billion due to cost reduction measures, partially offset by a negative impact of ¥110.0 billion due to the earthquake in Japan and ¥290.0 billion due to unfavorable exchange rates.
Consolidated revenues in the fiscal year rose marginally by 0.23% to ¥18.99 trillion ($235.80 billion) from ¥18.95 trillion, driven by a growth in unit sales in Asia (28%) and Other regions (15%), offset partially by a decline in unit sales in Japan (11.5%), North America (3%) and Europe (7%). Total unit sales increased 0.98% to 7.31 million units during the fiscal year.
Toyota’s total cost and expenses dipped 1.5% to ¥18.53 trillion from ¥18.80 trillion in the prior fiscal year. Operating income increased more than threefold to ¥468.28 billion from ¥147.52 billion in fiscal 2010 due to the same factors affecting the net income.
Segment Results
In the Automotive segment, revenues went up 0.79% to ¥17.32 trillion from ¥17.19 trillion a year ago. The segment had an operating income of ¥85.97 billion in sharp contrast to a loss of ¥86.37 billion in fiscal 2010, driven by cost reduction measures and increases in both production and sales volumes, offset partially by unfavorable changes in exchange rates.
In the Financial Services segment, revenue fell 4.3% to ¥1.17 trillion. However, operating income appreciated 45% to ¥358.28 billion driven by a decline in provision for credit losses for subsidiaries that finance sales.
In All Other businesses, revenues ebbed 7% to ¥497.77 billion. Operating income was ¥35.24 billion in contrast to an operating loss of ¥8.86 billion a year ago.
Revenues declined in all the geographic sales regions, except Asia and Other. Figures shrank 4.5% to ¥6.97 trillion in Japan, 4.6% to ¥5.33 trillion in North America and 8% to ¥1.92 trillion in Europe. Meanwhile, it increased 29% to ¥3.14 trillion in Asia and 7% to ¥1.64 trillion in Other regions.
Financial Position
Toyota had cash and cash equivalents of ¥2.08 trillion as of March 31, 2011, an increase from ¥1.87 trillion in the corresponding period a year-ago. Long-term debt amounted to ¥9.22 trillion as of March 31, 2011, reflecting a flat long-term debt-to-capitalization ratio of 47.2% compared with the year-ago figure.
In fiscal 2011, Toyota’s operating net cash flow declined to ¥2.02 trillion from ¥2.56 trillion in the prior fiscal year, primarily driven by lower provision for doubtful accounts and credit losses, higher pension and severance costs (net) and a decline in equity earnings of affiliated companies. Meanwhile, capital expenditures (net) increased to ¥1.15 trillion from ¥920.04 billion a year ago.
Looking Forward
Toyota did not provide any guidance for unit sales, net revenues and earnings for the fiscal year ending March 31, 2012. The company revealed that it needs more time to complete the evaluation of production and sales plans due to the impact of the earthquake in Japan.
However, the company believes improving world economy, expansion in the emerging markets such as China, technological development, new product launches and higher demand for fuel-efficient compact cars will positively affect its results. Nevertheless, backlash of the natural disaster in Japan and low employment are some of the headwinds facing the company.
Therefore, the company retains a Zacks #3 Rank (Hold) on its stock for the short term (1 to 3 months) and we reiterate our Neutral” recommendation on the stock for the long term (more than 6 months).
Peer Performance
Toyota’s domestic competitor, Honda Motor Co. (HMC) revealed a 38% fall in profit to ¥44.55 billion ($536 million) or ¥24.72 per share (30 cents per share) in the fourth quarter of the fiscal year ended March 31, 2011 from ¥72.18 billion or ¥39.78 per share in the same quarter of prior fiscal year.
The decline in profit was attributable to unfavorable currency translation effects, higher selling, general and administrative expenses and the natural disaster in Japan. These more than offset the positive impact from cost reduction measures, lower R&D expenses, increase in sales volume (except in the Automobile segment) and model mix, and operating income related to licensing agreements.
Consolidated net sales and other operating revenues slid 3% to ¥2.21 trillion ($26.62 billion) on the back of same factors outlined above, despite increased revenues in the motorcycle business and revenues related to licensing agreements. However, at constant exchange rates, revenues increased 3.3%. Consolidated operating profit plummeted 52% to ¥46.21 billion ($556 million) from ¥96.10 billion due to the same factors affecting the net income.
The automaker could not furnish any guidance for the fiscal six months ending September 30, 2011 or for the fiscal year ending March 31, 2012 due to the same reasons cited by Toyota.
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