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Toyota ups forecasts on strong quarter

Toyota Motor Corp, the world's No. 2 auto maker, posted a huge jump in quarterly profits on Thursday, fuelled by firm sales growth everywhere, prompting it to lift its earnings forecasts for the full year.
/ Source: Reuters

Toyota Motor Corp, the world's No. 2 auto maker, posted a huge jump in quarterly profits on Thursday, fuelled by firm sales growth everywhere, prompting it to lift its earnings forecasts for the full year.

With its famously lean production system, ability to develop vehicles quickly and reputation for building reliable cars, Japan's top auto maker is laying the groundwork to expand in every corner of the world to reach its goal of grabbing 15 percent of the global car market some time in the next decade.

Toyota's rosy earnings stand in stark contrast to those at Detroit's General Motors Corp and Ford Motor Co, which reported a worsening in October-December results as they lost customers to Japanese rivals in their home market.

Toyota, Asia's most valuable company with a market capitalisation of almost $120 billion, does not provide group-based forecasts. But it raised its parent-only projections for the year to the end of March, estimating a net profit of 560 billion yen ($5.31 billion), rather than 510 billion yen.

"We will likely post record profits on a group basis this year thanks to brisk global sales, which have kept our factories running at full capacity," Takeshi Suzuki, Toyota's head of finance, told a news conference.

A solid performance by its subsidiaries, including truck maker Hino Motors Ltd and minivehicle unit Daihatsu Motor Co, is also expected to bolster group earnings.

Group operating profit for the October-December quarter jumped 11 percent to 401.69 billion yen ($3.81 billion), even though the dollar's fall shaved 80 billion yen from earnings.

Net profit surged 60 percent to 286.47 billion yen, while sales rose 8.2 percent to 4.39 trillion yen.

"I'm sure Toyota will enjoy solid profit growth this business year," said Masaki Iso, chief investment officer at Yasuda Asset Management. "There's little to worry about the company's business prospects except for a possible rise in currency volatility."

Toyota is assuming a conservative dollar rate of 105 yen for the current half-year, meaning its full-year projections are safe as long as the currency stays at today's levels.

In the fast lane
With demand in North America and Europe surpassing initial expectations in the latest quarter, Toyota, which unseated Ford as the world's second-biggest car maker last year, raised its global sales forecast for the full business year by 80,000 to 6.65 million units, or up nine percent from last year.

Backed by brisk demand, Toyota said profits also soared in every major overseas market, with the most impressive improvement in the flagging European market, where profits rose by 90 times.

In absolute dollar terms, however, Toyota's biggest gains have been in the United States, where new sports utility vehicles (SUVs) such as the RX330 and pickups in the high-margin light trucks segment has helped it narrow the gap with the "Big Three".

Data this week showed it was one of the few brands to boost sales in the United States last month, with a 16 percent jump to come within reach of overtaking No. 3 brand Chrysler.

Last year, the maker of Lexus luxury cars also marked a milestone by becoming the best-selling car brand in the United States -- the first time for a foreign maker to do so -- aided by the hot-selling Corolla and the new and improved Prius hybrid.

Profits are also set to improve in Japan, where it recently launched the remodelled Crown, a flagship high-end sedan, while growth will be certain in the rapidly expanding Asian market.

Shares in Toyota climbed 10 percent during the past quarter, zooming past rival issues and the broader market. Prior to the news, Toyota ended up 2.65 percent on the day at 3,490 yen, while the broad-based TOPIX index gained 0.28 percent. ($1=105.43 yen)