© Reuters. FILE PHOTO: A view of the Toyota FT-3e elecric SUV concept vehicle during a press day of the Japan Mobility Show 2023 at Tokyo Big Sight in Tokyo, Japan October 25, 2023. REUTERS/Issei Kato/File Photo
By Daniel Leussink
TOKYO (Reuters) -Toyota Motor more than doubled its second-quarter profit and sharply raised its full-year outlook on Wednesday, as a weaker yen currency bolstered the impact of robust global sales.
The world’s top-selling automaker reported a record operating profit of 1.44 trillion yen ($9.5 billion) in the three months to end-September, a 155.6% increase from a year earlier.
Toyota (NYSE:) said it sold more cars in all global regions, including the United States, Asia and its home market, over the six months to end-September compared to the same period a year earlier.
After years of criticism for being slow to embrace battery electric vehicles, Toyota in June unveiled a sweeping revamp of its EV strategy and committed to improve the driving range and cut costs of electric vehicles.
It now appears to be benefiting from both market optimism about that strategy and renewed interest in its line-up of gasoline-electric hybrids as some of the enthusiasm around EVs fades, especially as consumers in the United States grapple with higher financing costs.
Hybrids, which tend to be cheaper than some pure battery-powered EVs, still account for more than 90% of Toyota’s electrified car sales. Sales of hybrids jumped 41% to 888,000 vehicles in the quarter to September.
Still, analysts have said that Toyota faces plenty of challenges, particularly in China, where the rise of domestic EVs and the market’s fast shift to battery-powered cars have hit rivals such as Nissan (OTC:) Motor and Honda (NYSE:) Motor hard.
China, the world’s top auto market, is in the midst of a “very severe price competition”, Chief Financial Officer Yoichi Miyazaki told a briefing following the results.
The major price competition was centred on battery EVs, he said.
Toyota also faces a battle in Southeast Asian markets such as Thailand due to rising Chinese investments, fuelled by higher demand for EVs.
The strong quarterly results should help Toyota’s growth plans. The company said overnight it would boost investment by $8 billion in a North Carolina plant that will make batteries for hybrids, plug-in hybrids and full-battery vehicles.
It lifted its full-year profit forecast to 4.5 trillion yen from 3 trillion yen, largely due to favourable effects from foreign exchange rates. Toyota expects the weaker yen to account for 1.18 trillion yen of the revision to the full-year profit.
The new projection compared to analysts’ average forecast of 4.0 trillion yen.
The yen hit a one-year low of 151.74 per dollar on Tuesday, before stabilising on Wednesday following renewed threats of currency intervention from Japan.
Toyota assumed an average rate of 141 yen per dollar in its calculations for the 2023/24 financial year compared to 125 yen previously.
The company also announced a 100 billion yen share buyback. Toyota shares finished up 4.7% on Wednesday following the release of the results, helping lift Japan’s benchmark index by 2.4%.
($1 = 151.2900 yen)