TOKYO – Toyota (TM), on track to overtake General Motors (GM) as the world's biggest automaker this year, said Friday its April-June profit jumped 32.3 percent to a record high for a quarter, lifted by strong overseas sales and a weaker yen.
Surging gas prices have proved a big plus for the Japanese automaker, as drivers flock to Toyota's fuel-efficient models, including the Camry, the best-selling model in the U.S., and the Prius gas-electric hybrid.
"The results are fantastic," said Tsuyoshi Mochimaru, auto analyst with Lehman Brothers in Japan.
Foreign sales are going strong, and the weak yen, which raises the value of overseas earnings when converted into yen, is making rosy earnings even rosier as Toyota's exports grow, Mochimaru said.
Group net profit at Toyota, which also makes the Lexus luxury model and compact Corolla, totaled 491.54 billion yen ($4.1 billion) for the quarter through June, up from 371.50 billion yen the same period the previous year.
Quarterly sales rose 15.7 percent on year to a record 6.523 trillion yen, or $54.7 billion. At current exchange rates, that's more than General Motors Corp.'s record quarterly sales of $54.5 billion, which the Detroit automaker marked in the second quarter of 2006.
But Toyota kept what some analysts say is a conservative forecast for the full fiscal year through March 2008, projecting net profit to inch up just 0.4 percent to 1.65 trillion yen ($13.85 billion) on sales of 25 trillion yen ($209.78 billion).
It also kept its vehicle sales target for the full fiscal year the same at 8.89 million vehicles.
"We posted substantial increases in both revenue and profit, our highest ever quarterly results," said Toyota Senior Managing Director Takeshi Suzuki.
Toyota has already surpassed General Motors in global vehicle sales for the first half of the calendar year, selling 4.72 million vehicle to GM's 4.67 million. Many analysts believe Toyota will likely beat GM for the full year in both sales and production.
The title of world's biggest automaker — which GM has held for 76 years — typically is determined by annual global vehicle production numbers. For the first six months of the year, Toyota and its group companies made 4.71 million vehicles worldwide, while GM estimates that it made 4.75 million vehicles during the period.
For the calendar year, Toyota is projecting global sales of 9.34 million vehicles. GM does not give full-year projections, but sold about 9.1 million vehicles in 2006.
GM, meanwhile, has been battling back from losing money in recent years.
Earlier this week, the Detroit-based company reported its third straight quarter of black ink, earning $891 million on the back of strenuous restructuring efforts.
Toyota said sluggish domestic vehicle sales were offset by greater demand in North America, Europe and the rest of Asia.
But even in Japan, operating profit improved because of solid demand for the Lexus, a model that brings in more profit per car than cheaper models, it said.
In North America, a market that's proving tough recently, Toyota sold 762,000 vehicles in the April-June period, an increase of 15,000 vehicles from the same period the previous year, on the successful launch of the Tundra truck and Lexus LS.
The yen's relative weakness against the dollar added 100 billion yen ($839.1 million) to Toyota's bottom line.
Cost reduction efforts offset the damage from higher costs of raw materials, the company said.
Like other Japanese automakers, Toyota was hurt by a temporary closure of a key parts maker in northwestern Japan, which was hit by a 6.8 magnitude earthquake that killed 11 people last month. But Toyota says it can make up for the production loss by the end of the year.
Toyota shares inched up 0.1 percent to 7,080 yen ($59.41). The results were announced shortly before the market closed.