TOKYO – Toyota Motor Corp.'s profit rose 2 percent in the July-September quarter, lifted by growing sales around the world — in sharp contrast with the dismal results at U.S. counterparts General Motors (search) and Ford (search).
Japan's No. 1 automaker on Friday reported its group net profit for the fiscal second quarter rose to 303.7 billion yen, or $2.6 billion, from 297.4 billion yen the same period a year ago.
Sales for the quarter rose 9 percent to 4.97 trillion yen, $42 billion, from 4.5 trillion yen.
The results put Toyota on pace to set a record net profit for the full fiscal year through March 2006 for the fourth straight year.
Toyota, the maker of the best-selling Camry compact and Prius gas-and-electric hybrid cars, does not give consolidated forecasts, but it said Friday it expected to sell 8.03 million vehicles for the current fiscal year, up 60,000 vehicles from its August forecast, and above the 7.4 million vehicles sold the previous year.
That annual figure for fiscal 2005 is still fewer than General Motors Corp.'s yearly sales, but if trends continue, Toyota will overtake GM in the next few years, some analysts say. Toyota has already passed up Ford Motor Co. as the world's second biggest automaker. GM produced 9.1 million vehicles last year.
"We attained a high level of profit while expanding production capacity and developing advanced technology and future products in response to strong demand worldwide," Toyota Executive Vice President Mitsuo Kinoshita said at a press conference.
Both GM and Ford are seeing their U.S. market share dwindle at the expense of Toyota and other Asian automakers. GM and Ford have also been offering huge incentive discounts to sell their cars, which have slammed earnings.
Detroit-based GM lost more than $3 billion in the first nine months of this year. Ford, based in Dearborn, Michigan, reported a third-quarter loss of $284 million.
By contrast, Japanese automakers have had an upbeat earnings season. Nissan Motor Co., Honda Motor Co., Mazda Motor Corp. and now Toyota have all reported healthy earnings for the quarter.
With their reputation for fuel-efficient cars, Japanese automakers are benefitting at a time when gas prices have surged. They are also market leaders in ecologically friendly vehicles.
For the fiscal first half, Toyota's profit dipped 2 percent to 570.5 billion yen ($4.9 billion; euro4 billion) from 584 billion yen the same period the previous year. But first half sales surged 10 percent to 9.95 trillion yen ($85 billion; euro71 billion) from 9 trillion yen the previous year.
Vehicle sales for the six months climbed 7.5 percent to 3.83 million vehicles — a half-year record high — from 3.5 million vehicles.
Operating profit fell nearly 7 percent compared to the same period a year ago as higher material costs and the shift in demand to smaller cars with lower profit margins squeezed earnings.
During the first half, cost cuts added 60 billion yen ($512 million) and a favorable exchange rate added another 20 billion yen ($171 million) to Toyota's bottom line. A strong dollar boosts the overseas earnings of global Japanese companies like Toyota, when converted into yen.
But results were hurt by a 198 billion yen ($1.7 billion) expense for business expansion, and an absence of a gain last year from the transfer of pension money to the government.
By region, strong demand for the Prius hybrid, Avalon sedan and Tacoma pickup truck boosted vehicle sales in North America to 1.25 million vehicles for the fiscal first half, up from 1.12 million the previous year.
Vehicle sales in Japan dipped nearly 1 percent to 1.09 million vehicles during the first half, compared to 1.1 million a year ago. Toyota, which controls about 40 percent of the Japanese auto market, introduced its Lexus luxury brand in Japan this year in an attempt to strengthen its brand image in an intensely competitive market.
In Europe, Toyota introduced the Aygo in March, produced by Toyota's joint venture with PSA Peugeot Citroen, helping boost first half vehicle sales there to 498,000 vehicles, up from 476,000 a year ago. Sales were also up in Asia outside Japan as well as in other regions, including Africa and South America.
Toyota expects strong results for the full year, the manufacturer, based in the central Japanese city of Toyota, said in a statement, as long as the dollar remains relatively strong.
Toyota shares closed up nearly 1 percent at 5,400 yen ($46) on the Tokyo Stock Exchange shortly before earnings were announced. Toyota stocks have gained about a third of their value from earlier this year.