Toyota Annual Results Show Profitability Struggle Goes On

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Toyota posted its fiscal year 2022 operating results this morning that showed a record full-year net profit on increased sales and a cheaper yen.

However, the world’s largest selling automaker in 2021 made wary forecasts as the Covid pandemic and Putin’s war in Ukraine continue to play havoc with  supply chains. Toyota reported a net profit of 2.85 trillion yen ($22 billion), up 27% percent from 2021. However, for the current  fiscal year ending March 2023, it forecast an annual net profit of 2.26 trillion yen ($17.3 billion).

So in Toyota’s view its profitability struggle goes on. Akio Toyoda said consolidated vehicle sales for the period were 8.230 million units, which was 107.6% of consolidated vehicle sales for the same period of the previous 2021 fiscal year. The year-end dividend will be 28 yen per share. Thus, Toyota finds itself pretty much in the same place as all other major automakers.

The sales produced consolidated financial results for this fiscal year at revenues of 31 trillion 379.5 billion yen. Operating income was 2 trillion 995.6 billion yen. Income before income taxes were  3 trillion 990.5 billion yen. This added to a net income of 2 trillion 850.1 billion yen.

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“First, the effects of foreign exchange rates increased operating income by 610 billion yen,” Toyoda said. “Second, cost reduction efforts decreased operating income by a net of 360 billion yen. This consisted of a 280 billion yen increase due to cost reduction efforts and a decrease of 640 billion yen due to the impact of soaring materials prices. Third, marketing efforts increased operating income by 860 billion yen, largely due to the increase in sales volume and improved earnings in the financial services business.

“Finally, an increase in expenses decreased operating income by 220 billion yen. As a result, excluding the overall impact of foreign exchange rates, swap valuation gains and losses and other factors, operating income increased by 280-billion-yen year-on-year,” Toyoda said.

Regions

North America: Vehicle sales totaled approximately 2,394,000 units, an increase of 81,000 units. Operating income, excluding the impact of valuation gains/losses from interest rate swaps, increased by 169.8 billion yen ($1.516 billion) to 532.5 billion yen ($4.754 billion).

Japan: Vehicle sales totaled approximately 1,924,000 units, a decrease of 201,000 units. Operating income, excluding the impact of valuation gains/losses from interest rate swaps, increased by 274.7 billion yen ($2.452 billion) to 1.4255 trillion yen ($12.727 billion).

Europe: Vehicle sales totaled approximately 1,017,000 units, an increase of 58,000 units. Operating income, excluding the impact of valuation gains/losses from interest rate swaps, increased by 57.2 billion yen ($510.71 million) to 171.7 billion yen ($1.533 billion).

Asia: Vehicle sales totaled approximately 1,543,000 units, an increase of 321,000 units. Operating income, excluding the impact of valuation gains/losses from interest rate swaps, increased by 220.8 billion yen ($1.971 billion) to 657.1 billion yen ($5.866 billion).

Other regions (including Central and South America, Oceania, Africa, and the Middle East): Vehicle sales totaled approximately 1,352,000 units, an increase of 325,000 units. Operating income, excluding the impact of valuation gains/losses from interest rate swaps, increased by 165.9 billion yen ($1.481 billion) to 230.7 billion yen ($2.059 billion).

Toyota’s Executive Summary Fiscal Year Ended March 2022

Operating income 2.995.6 billion yen:

• “Under the production constraints due to the spread of COVID-19 and semiconductor shortages, dealers, suppliers, and production sites worked tirelessly in order to deliver as many cars as possible to customers.
• “Despite soaring material prices and increase in expenses for the investment in new business fields, we achieved growth in revenue and profit due to cost reduction and marketing efforts.
• “Improvement of our revenue structure, which we have been working on for a long time, towards one that is not dependent on foreign exchange rates and volumes.”

Forecast: Operating income 2.400.0 billion yen

• “Having safety and security as our top priority, we have reconsidered our production volume assumption to an appropriate level (Toyota & Lexus 9,700,000) We expect a decrease in our operating income due to unprecedented increases in materials and logistics costs. However, we will continue with our future investments and promote our various activities.”

Return to Shareholders

• Year-end dividend of 28 yen per share (+1 yen from previous year), and maintaining a steady increase
• Share repurchases will be 200 billion yen (maximum), including 100 billion yen set aside to enable more flexible share repurchase than before while considering share price levels. FOREX-rate assumptions are 115 yen per US dollar and 130 yen per Euro.