Tag Archive | "forecasts"

Toyota Forecasts Profit Will Double to Highest in 5 Years

Toyota Motor Corp., Asia’s biggest carmaker, forecast profit will more than double to a five-year high as it shakes off last year’s natural disasters and introduces new models to regain market share.

Net income may increase to 760 billion yen ($9.5 billion) in the fiscal year ending March 2013, after falling to 283.6 billion yen, the Toyota City, Japan-based carmaker said today. The profit forecast was 7 percent below the average analyst estimate compiled by Bloomberg, while the company projected higher-than-expected revenue growth.

Chief Executive Officer Akio Toyoda, 56, is rolling out new Prius hybrids, Corolla compacts and Lexus sedans to regain lost ground in what may be his first crisis-free year since becoming president in 2009. While production has returned to normal, the grandson of the founder now faces a reborn General Motors Co. that’s leading the industry in global sales, a rising Hyundai Motor Co. and a growing Volkswagen AG that’s dominating luxury- car sales in China.

The earnings show “they have strong confidence of improving profits and regaining market share, mainly in the U.S. but other markets as well,” said Kunihiko Shiohara, an analyst at Credit Suisse Group AG in Tokyo. “It’s going to give quite a favorable impression on the auto industry as a whole, as well as impressions on the Japanese economy.”

Toyota rose as much as 0.8 percent in Frankfurt trading after the revenue forecast of 22 trillion yen was 6 percent higher than the average analyst estimate compiled by Bloomberg. The projection for operating profit of 1 trillion yen was in line with expectations.

The company reported results after the close of trading in Tokyo, where Toyota shares have gained 23 percent this year, outperforming Nissan Motor Co., Honda Motor Co. and GM.

The maker of Corolla and Camry sedans said that deliveries — including those of its Daihatsu Motor Co. and Hino Motors Ltd. subsidiaries — will increase 18 percent to 8.7 million vehicles this fiscal year, led by North America, where sales will climb 26 percent to 2.35 million units. They’ll increase 6.2 percent in Japan, 34 percent in the rest of Asia and 10 percent in Europe Toyota said.

The recovery began last quarter, with net income more than quadrupling to 121 billion yen as Toyota cranked up production 36 percent and the Japanese market became profitable for the first time in more than two years. The yen, which appreciated and eroded the value of Japanese exports during 2010 and 2011, became this year’s worst performer by the end of March.

The rebound wasn’t enough to keep full-year income from tumbling 31 percent as the March 11 Japanese disaster and subsequent floods in Thailand crippled automotive output. Toyota wasn’t alone as Tokyo-based Honda last month reported annual profit fell 60 percent and Yokohama, Japan-based Nissan, which reports May 11, has said since February that net income would slide 7.9 percent in the year ended March 2012.

Toyota, saddled with the highest proportion of Japanese production among the nation’s three largest carmakers, is slower than Nissan and Honda in recovering. While Toyota is forecasting it’s operating profit margin to reach 4.5 percent this fiscal year, Honda expects to reach 6 percent and analysts estimate Nissan to hit 7.2 percent.

“We know Toyota is slow in taking action but it’s about time for them to answer how long they will stick to Japanese production at the expense of being profitable and globally competitive,” said Yuuki Sakurai, chief executive officer at Fukoku Capital Management Inc. in Tokyo. “It’s one lap behind other carmakers.”

Still, Toyota’s projections indicate it will earn more than GM, which last week reported net income fell 61 percent to $1.32 billion on losses and restructuring costs in Europe. Analysts estimate the Detroit-based company will earn $7.38 billion over the next four quarters, excluding preferred dividends, which last year totaled $1.61 billion.

After ceding its title as the world’s largest automaker to GM in 2011, not much is going wrong for Toyota in its two biggest markets this year.

Pent-up demand and government subsidies, which last until January, have helped Japan grow faster than any other major auto market this year. Passenger-vehicle sales in the country have jumped 57 percent during the first four months of 2012, led by Toyota’s Prius hybrids, according to the Japan Automobile Dealers Association. That benefited Toyota as it generated 60 percent of its revenue from Japan last fiscal year.

The reliance on its home market may decline as Toyota forecast its deliveries to North America will overtake those of Japan this fiscal year. Toyota’s sales in the U.S. have increased 12 percent this year — outpacing GM, Ford Motor Co., Nissan and Honda — on demand for the Camry sedan and the Prius hybrids, as buyers who put off purchases returned to dealerships to find more fuel-efficient models.

Total U.S. light-vehicle sales, which rose to a seasonally adjusted annual rate of 14.4 million in April, have exceeded analysts’ estimates three out of four months this year.

In Europe and China, where auto sales fell during the first quarter, Toyota has been less vulnerable to slumping demand because it is less reliant on those markets than companies such as PSA Peugeot Citroen and GM. Toyota, which had a global market share of about 10 percent in 2011, accounted for 3.2 percent of Europe’s market and 4.3 percent in China, according to data compiled by Bloomberg.

Toyota made about half of its vehicles in Japan in the year ended March, making it more vulnerable to a stronger yen than its nearest rivals. Nissan Motor Co., Japan’s second-biggest carmaker, built a quarter of its vehicles in Japan and Honda Motor Co. about 30 percent.

Toyota is basing this year’s profit forecasts on an exchange rate of 80 yen to the dollar and 105 yen to the euro. The stronger yen cut operating profit by 250 billion yen in the year ended March 31, Toyota said today. The company plans to increase research and development spending 3.9 percent to 810 billion yen and capital expenditure 16 percent.

For Toyoda, the natural disasters followed the crisis he oversaw during 2009 and 2010, when defects related to unintended acceleration led to the recall of more than 10 million vehicles — more than Toyota has sold in its best year.

“We want this year to be a calm year,” Toyoda said today. “It’s only been five months, but we expect everyone’s efforts to shine this year.”

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Honda’s Ito Forecasts Business Results to Be Best in at Least Five Years

Honda Motor Co. President Takanobu Ito forecast that business results at Japan’s third-biggest carmaker will climb to the highest in at least five years, led by sales of Accord sedans and Civic compacts in North America.

Business results in the year ending March 2013 will recover to levels achieved before the failure of Lehman Brothers Holdings Inc. roiled global markets, as sales climb above 4 million vehicles for the first time, Ito said in an interview this week. Lehman filed for bankruptcy in September 2008, six months after Honda earned record annual profits, according to Bloomberg.

“It will be the year of the complete rebound,” Ito said at the company’s Tokyo headquarters. “Sales in North America will lead the recovery. We’ll introduce a fully revamped Accord in the fall, and that will be a big plus to our sales.”

Ito’s comments reflect a revival in confidence by Japanese automakers as they recover from a year plagued by natural disasters at home and in Thailand. Toyota Motor Corp., Asia’s largest carmaker, said this week annual sales will be 100,000 units higher than it anticipated last month.

“Honda’s targets are definitely aggressive, but the U.S. economy seems like it’s going to recover to a better-than- expected level this year so it’s likely for them to achieve it,” said Mitsushige Akino, who oversees $600 million at Ichiyoshi Investment Management Co. in Tokyo. “They’ve remodeled their best-selling cars, and we can expect strong sales in North America to help them regain market share.”

Honda fell 1.9 percent to close at 2,689 yen in Tokyo. It’s gained 15 percent this year, the best performer among Japan’s three biggest automakers. That’s a reversal from 2011, when the stock’s 27 percent drop made it the worst performer.

Honda’s operating income, or sales minus the cost of goods sold and administrative expenses, will probably double to 586.6 billion yen ($7.6 billion) next fiscal year after shrinking 52 percent, according to the average of 24 analyst estimates compiled by Bloomberg. Earnings reached 953.1 billion yen, 851.9 billion yen and 868.9 billion yen, respectively, in the years before Lehman’s bankruptcy.

Ito, 58, is counting on the U.S. market to drive growth.

The redesigned Accord sedan, the Civic and CR-V sport- utility vehicle will help Honda increase U.S. sales 24 percent to 1.43 million units in 2012, Ito said. Sales in the market, Honda’s largest, declined 6.8 percent last year, led by a 17 percent drop in deliveries of the Accord. The Accord is Honda’s best-selling U.S. model, followed by the Civic.

Ito ruled out any major overhaul of the Civic after the current version of the sedan, which failed to receive the “recommended” status its predecessors had from Consumer Reports magazine, was the best-selling model in the compact-car segment in the last three months of the year.

Honda’s new models will give it an edge in the U.S. over South Korea’s Hyundai Motor Co., which is producing close to full-capacity, said Kota Yuzawa, a Tokyo-based analyst at Goldman Sachs Group Inc. That puts Honda in “good position” to regain lost market share, he said.

Honda may not be alone. Japan’s three biggest carmakers are poised to gain market share this year at the expense of U.S. producers led by General Motors Co. and Ford Motor Co., according to five analysts surveyed by Bloomberg.

In China, the world’s largest auto market, Honda expects its sales to rise more than 20 percent to 750,000 units in 2012 after they shrank for the first time in 2011 in a slowing market, Ito said. The company plans to introduce three gas- electric hybrid models in the country this year, he said.

“China is still strong,” Ito said. “Once motorization captures a market, it’s unstoppable.”

China’s total vehicle sales — including cars, trucks and buses — grew 2.5 percent to 18.5 million units last year, according to the China Association of Automobile Manufacturers, trailing growth in the U.S. for the first time in at least 14 years. Honda expects the market to expand to 20 million this year, or “just above” China’s economic growth, he said.

In Thailand, where the country’s worst floods in almost 70 years disrupted assembly plants and supply of components in 2011, Honda plans to resume production starting in April, Ito said. Damages stemming from Thailand forced the company to scrap this fiscal year’s profit forecast.

As part of Honda’s strategy of producing cars where they are sold, the company plans to reorganize its Japanese factories so they focus on production of minicars, a growing category that makes up about 40 percent of the nation’s auto demand, Ito said. Orders for the N Box minicar in Japan reached 27,000 units in its first month of sales, more than double Honda’s original target.

Minicars, defined as vehicles no longer than 3.4 meters (11 feet) in length, will account for 40 percent of Honda’s Japan sales, compared with 25 percent now, Ito said.

Honda joins Toyota and Nissan in reorganizing operations as the yen, which has gained against the world’s 16 most-traded currencies for two straight years, erodes the value of exports. Honda plans to boost the portion of vehicles sold in the same region they’re built to as high as 80 percent, Ito said. In 2010, Honda sold about two out of three Japan-built cars in the country.

Officials at Toyota and Nissan this month have also echoed plans to increase their portion of vehicles sold in the region where they’re assembled.

“Minicars will be key for us in Japan in the next five years,” Ito said.

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Ford Earns $20.2B in 2011; Some Call 4Q ‘Weak’

Ford Motor Co. reported $20.2 billion in net income for 2011 Friday — its best year since 1998 and second-best year ever – as its results were boosted by a one-time accounting gain.

This is Ford’s third consecutive annual profit, after losing more than $30 billion between 2005 and 2008.

But the company’s fourth quarter results didn’t meet expectations – with concerns raised about heding and commodity costs. Ford also sounded some caution about 2012 – especially in Europe and South America, reported The Detroit News.

Ford’s stock fell sharply on the results. In early results, Ford was down 4.6 percent to $12.16, or $0.59, in very heavy trading.

Ford reported fourth quarter earnings of $0.20 –excluding the accounting change — below the Wall Street consensus of $0.27 a share.

“If you get over the small disappointment over the fourth quarter, this has been a good year,” said Ford chief financial officer Lewis Booth in an interview, noting the economic uncertainty in Europe and Asian natural disasters.

Excluding the one-time tax gains, it was still Ford’s best annual operating profit since it earned $11.5 billion in 1999, the company said.

Under a formula agreed to by the United Auto Workers, Ford’s earnings generated about $6,200 in annual profit sharing for its 41,600 hourly employees. Those workers received payments for the first half of the year, approximately $3,750 per person, in December. For the second half of 2011, the formula generated approximately $2,450 per employee, which is to be distributed in March. Profit sharing payments for individual employee will depend on how many hours each worked.

The company’s 2011 results were boosted by a one-time, noncash gain of $12.4 billion in prior year tax losses that had been set aside starting in 2006.

Ford’s pre-tax operating profit was $1.1 billion in the fourth quarter. Excluding the special item, Ford earned $8.8 billion in operating income in 2011.

“We delivered strong results for the full year as we continued to serve our customers around the world with best-in-class vehicles and make progress toward our mid-decade goals,” Ford President and CEO Alan Mulally said.

“Despite the continued uncertainty in the external environment, the strength of our North American and Ford Credit operations allows us to continue to invest for future growth.”

Ford has now reported 10 consecutive profitable quarters. For the year, Ford earned $6.2 billion in operating profits in North America, up from $5.4 billion in 2010.

But the company’s results for 2012 didn’t impress some analysts. JPMorgan analyst Himanshu Patel called the fourth quarter results “weak.”

Morgan Stanley auto analyst Adam Jonas said in a note that Ford missed its forecasts for fourth quarter results. But he said Ford’s “2012 outlook for ‘about equal’ total company pretax profit with higher auto profit and auto margins is encouraging. 2012 may be shaping up to be a very good year for Ford.”

The automaker said it cut its debt from $19 billion to $13.1 billion by the end of 2011. Ford’s results were also boosted by $400 million by the sale of its Ford Russia operations to a joint venture.

Dearborn-based Ford said in 2012 it expects its market share to be “about equal” in the United States and Europe to 2011. Last year, it forecast market share gains in both the U.S. and Europe. Ford’s market share was up 0.1 percent to 16.5 percent in 2011 in the U.S. – but its retail share was flat at 14 percent.

Ford said it had a $190 million loss in Europe in the fourth quarter, up from a $51 million loss in same period a year ago. The company lost $27 million in Europe for all of 2011, compared with a $182 million profit in 2010.

The automaker said that it has challenges to address in Europe and South America. Uncertainties about the debts of major European countries have raised fears about a major economic slowdown in Europe.

The company’s pension plans, worldwide, are underfunded by $15.4 billion — up from $11.5 billion a year ago. In the U.S., its pension obligations are underfunded by $9.4 billion, up from $6.7 billion. Ford, which contributed $1.5 billion to its global pension plans in 2010, plans to make $3.5 billion in contributions to those plans this year, including $2 billion to its U.S. pension funds.

JPMorgan said Ford may be considering UAW pension buyouts — something that analysts have said General Motors Co. may announce later this year.

“Like GM, Ford is more actively discussing ‘de-risking’ steps for its pension, which include limiting liability growth, discretionary contributions … and ‘other actions under development,’ which may hint at UAW pension buyouts,” Patel said.

Ford Chief Financial Officer Lewis Booth said the automaker is considering unspecified “strategic actions” to address its pension underfunding. He declined to answer whether Ford is considering pension buyouts.

GM chairman and CEO Dan Akerson also declined to say this week if the automaker is considering a UAW pension buyout.

Ford Motor Credit Co. earned $2.4 billion in profits in 2011, down from $3.1 billion in 2010, because fewer leases are being terminated.

Chrysler Group SpA is to report Feb. 1, followed by Detroit-based GM on Feb. 16. Chrysler is expected to report a full-year profit and GM has earned about $8 billion in the first nine months of the year.

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KBB Predicts 10 Percent Increase in January New-Car Sales

IRVINE — Kelley Blue Book predicated yesterday that January new-vehicle sales will fall 30 percent below the December high, and end the month at 900,000 units sold. This equates to a 13.2 million seasonally adjusted annualized rate (SAAR).

On a year-over-year basis, 900,000 units would market a nearly 10 percent increase from last January. For the year, KBB forecasts new-vehicle sales to surpass 13.3 million units this year, a predication that’s based on its expectations that the U.S. economy will continue its recovery at a moderate pace. The vehicle information sites also expects rising demand from consumers to replace their aging vehicles, reported F&I and Showroom magazine.

“Our analysts have produced a regression model that explores unemployment, housing, consumer confidence and seasonal patterns to assist with our sales forecast for the year,” said Alec Gutierrez, senior market analyst of automotive insights for KBB. “Given current market conditions and our expectations for 2012, we believe sales will continue to improve at a conservative pace in 2012.”

Improving unemployment conditions and heightened demand stemming from the increasing age of vehicles is expected to help drive sales in 2012, according to KBB. “The more comprehensive measure of unemployment provided by the Bureau of Labor Statistics, U6, which includes part-time workers that would prefer to work full time and marginally attached workers, is still at 15.2 percent,” Gutierrez said. “While this is lower than the 15.6 percent of November, it is still quite high overall.”

Consumer confidence and housing are projected to remain relatively stable through 2012 and will not influence sales significantly, according to KBB. If current projections hold true, 2012 will be another solid year for manufacturers, but significant downside risks that could slow down the momentum of the sales recovery remains.

“We remain especially concerned about the ongoing European debt crisis and the heightened tensions with Iran as potential events that could derail the current U.S. vehicle sales recovery,” Gutierrez said. “The European debt crisis has been of particular concern in recent weeks due to the debt rating downgrade of France, Portugal, Italy, and other European economies, leading to concerns for their ability to generate interest in future bond offerings.”

The site’s analysts project that General Motors, Ford and Toyota to lead new-vehicle sales in January, citing the brands’ recent redesigns. “General Motors will be led by strong performances from the Chevrolet Silverado, the hot-selling compact Cruze, and the Equinox crossover, while later in the year a new redesign for the Chevrolet Malibu also will help boost sales for GM,” Gutierrez said.

Ford will look to the redesigned Focus, Fiesta and F-150, to drive sales in January, Gutierrez added. The 2013 Escape and Fusion redesign also will help keep Ford’s sales momentum strong. After losing market share from recalls in 2010 and the inventory shortages resulting from the earthquake in Japan in 2011, Toyota will look to the redesigned Yaris, Camry and Prius V to inflate sales in January.

“In January, we are currently projecting GM and Ford to maintain 18.8 and 16.1 percent share, respectively,” Gutierrez said. “Although GM and Ford will lead sales overall, Toyota isn’t too far behind in third place and they will likely push to regain share throughout 2012.”

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