TOKYO — Despite a strong yen and the lingering fallout from recalls, Toyota said Wednesday that it had roared back to profit in the April-to-June quarter thanks to strong sales in emerging markets and aggressive cost-cutting. þþToyota’s net quarterly profit of ¥190.4 billion, or $2.2 billion, was a sharp reversal from a loss of ¥194.8 billion in the same period last year. The results show that the company, the largest automaker in the world, continues to recover from a slump brought on by the global economic crisis, despite a series of recalls over faulty pedals and inquiries into its safety record. þþThe company, based in Toyota City, Japan, raised its net profit outlook for the full business year ending in March 2011 to ¥340 billion from a ¥310 billion forecast earlier this year, citing a recovery in sales and progress in cost-cutting efforts. þþToyota said it now expected to sell 7.38 million vehicles in the fiscal year, up from the 7.29 million it forecast earlier. þþBut Takahiko Ijichi, senior managing director, said the strengthening yen could cloud the company’s outlook. The yen has risen steadily in recent months, hitting an eight-month high against the dollar in trading Wednesday as concerns over the U.S. economy caused investors to sell the U.S. currency. þþA stronger home currency hurts Japanese exporters by making their products more expensive overseas and eroding the yen value of their foreign currency earnings. Toyota said it had based its full-year forecast on exchange rates of ¥90 to the dollar; however, the dollar was selling for around ¥85 in late trading in Tokyo on Wednesday. þþMr. Ijichi also warned that a faltering economic recovery in major markets, including the United States, and the expiration of government incentives could also hurt earnings. In Japan, sales are expected to lose steam later this year when the government winds down subsidies for fuel-efficient cars. þþStill, revenue at Toyota surged to ¥4.87 trillion in the April-to-June quarter, an increase of 27 percent from the same period the previous year. The automaker sold 1.82 million vehicles in the quarter — 419,000 more than a year earlier. þþMr. Ijichi said that a companywide cost-cutting drive, including efforts to cut waste in Toyota’s supply chains, had added ¥50 billion to profits. þþToyota said business was brisk in Asia and the Middle East, though Toyota still lagged behind rivals in China, the biggest auto market in the world. þþThe effects of the economic downturn and the pedal recalls were still evident in the United States, although aggressive incentives were helping to lure buyers back. Toyota said Tuesday that its sales in the United States had fallen 3.2 percent in July from the same period a year earlier. þþ“Asia is growing at an incredible rate,” Mr. Ijichi said. “We expect this to continue for the time being.” þþThe outlook for the United States was more uncertain, he said, given mixed signals on the strength of the economic recovery there. “There are signs that the auto market remains resilient,” he said. Automakers are on track to sell about 12 million vehicles this year in the United States, up from 10.4 million in 2009. þþIn the business year that ended in March, Toyota earned ¥209 billion. In the previous year, it lost ¥437 billion, its first annual loss in decades. þþIn the year that ended in March 2008, Toyota’s net profit hit ¥1.7 trillion. þþMuch is at stake for Toyota, which surpassed General Motors to become the world’s biggest carmaker in 2008, only to see its business battered by the global economic downturn and recalls. þþToyota has recalled about 8.5 million vehicles worldwide for faulty accelerator pedals and other problems, which have tarnished the automaker’s reputation for making safe and reliable cars. Toyota also faces multiple shareholder lawsuits, as well as consumer lawsuits claiming injuries or deaths caused by sudden acceleration incidents. þþThe annual J.D. Power & Associates Initial Quality Study for 2010 showed that Toyota fell to 21st out of 33 brands from sixth place the previous year. It was the first time in the 24-year history of the survey that the company fell behind the industry average. þþPresident Akio Toyoda has promised to overhaul the company’s safety efforts. Last month, the company bolstered a division tasked with overseeing quality, adding 1,000 engineers. The company has also said it will open new offices in the United States to investigate customer complaints more swiftly. þþToyota’s top management has forfeited bonuses for the second consecutive year. A filing earlier this year revealed that Mr. Toyoda had received compensation of less than $1 million last fiscal year, a fraction of what his counterparts at the Detroit automakers were paid. þþBut Toyota has also been hit with a fresh round of recalls. Last month, the automaker said it would repair 480,000 Avalon sedans and Land Cruiser SUVs that had defective steering parts. It also recalled Lexus SUVs earlier this year. þþShares of Toyota fell 1.6 percent to ¥3,090 in Tokyo before the earnings were announced. Toyota’s share price has dropped about 22 percent over the past year, faring worse than the Nikkei 225, which has dipped 8.5 percent in the same period.þ
Source: NY Times
