Tag Archive | "profit"

Toyota Chalks Up Record Profit, Vehicle Sales


Via Detroit Free Press

TOKYO — Toyota chalked up a record annual profit and sales above 10 million vehicles for the first time, but forecast Thursday a slower year ahead as the momentum from a weak yen fades.

Expenses such as the $1.2 billion penalty it paid in a settlement with the U.S. Justice Department earlier this year for hiding information about defects in its cars dented its profit for January-March quarter, according to Toyota.

Toyota, the world’s top automaker, is forecasting a 1.78 trillion yen ($17.5 billion) profit for the fiscal year through March 2015.

That’s lower than what the company recorded for the fiscal year just ended, when its profit almost doubled to a record 1.82 trillion yen ($17.9 billion) from 962 billion yen the previous year.

Annual sales jumped 16 percent to 25.69 trillion yen ($252 billion), helped by a weak yen which aids Japanese exporters and thanks to growth in the U.S., Europe, Japan and the rest of Asia. The yen perk is likely transitory as the currency isn’t expected to weaken indefinitely.

Toyota believes Japan sales were inflated in recent months as consumers rushed to buy ahead of a tax increase that kicked in April 1, so that such growth won’t hold up during the current fiscal year.

Still, the company is on a roll.

The maker of the Prius hybrid, Lexus luxury model and Camry sedan became the first automaker to sell more than 10 million vehicles in a 12 month period, with sales totaling 10.13 million vehicles around the world for the fiscal year ended March. It also expects to surpass the 10-million milestone for the current calendar year.

It is expecting solid growth to continue, hoping to sell 10.25 million vehicles globally for the fiscal year through March 2015.

Highlighting the Japanese automaker’s ambitions, it noted that extra costs including research and development expenses were a factor in reducing its January-March profit to 297 billion yen ($2.9 billion) from 313.9 billion yen a year earlier.

Quarterly sales rose 12.5 percent to 6.57 trillion yen ($64.5 billion).

It also said costs related to closing its auto plant in Australia cut into profits.

Toyota has bounced back from a massive recall crisis that began in late 2009, which tarnished its reputation.

But there was a moment of deja vu last month when it announced a recall of 6.4 million vehicles globally, for a variety of problems spanning nearly 30 models in Japan, North America, Europe and other places. Some vehicles were recalled for more than one problem.

Toyota has been trying to put the recall mess behind it, with the $1.2 billion settlement it reached with the U.S. Justice Department. It earlier paid fines of more than $66 million for delays in reporting unintended acceleration problems.

The National Highway Traffic Safety Administration never found defects in electronics or software in Toyota cars, which had been targeted as a possible cause.

Even more of a threat than recalls could be the fierce competition Toyota faces in key global markets from Volkswagen of Germany and Hyundai of South Korea, as well as U.S. automakers such as General Motors and Ford Motor.

Toyota sold fewer vehicles in North American for January-March at 567,000 vehicles compared to the same period the previous year at 603,000 vehicles.

But it is making up for such losses in other markets.

A weak yen also helped earnings at Honda Motor., which last week said that January-March net profit totaled 170.5 billion yen ($1.67 billion), up from 75.7 billion yen the year before.

Honda sold nearly 1.2 million vehicles worldwide during the quarter, also helped by demand ahead of the Japanese tax rise. It is forecasting a 4 percent rise in annual profit to 595 billion yen ($5.8 billion).

Although the dollar soared to about 100 yen during the past fiscal year from about 80 yen the fiscal year before that, it’s unlikely to keep rising at that pace, to 120 yen, for instance.

Nissan, allied with Renault of France, releases results Monday.

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GM’s April Sales Boost Raises Hope Of Gliding Past Recall Woes


Via Forbes

In where it matters most, General Motors seems to be holding up well amid the safety-recall crisis. Its U.S. sales in April were up 7 percent over a year earlier, a relative performance that put GM no worse than in the middle of the pack of how car brands fared during the month.

And GM’s retail sales were up by 8 percent, an indication that the company and its brands haven’t lost the hearts and minds of American car buyers who have been expected to react with varying degrees of aversion as news keeps coming about the automaker’s epic mishandling of the recall of 1.6 million vehicles, sold last decade, because of accident risks from ignition switches.

Some analysts suggest that GM actually has been benefiting from extra showroom traffic brought by owners of the recalled cars who are trading them in for new cars rather than fixing them, and who now are being incentivized with the offer of employee pricing for new vehicles.

In any event, for the year to date through April, GM finally was able to elevate sales to a flat comparison with 2013, after a difficult first quarter of this year.

April sales by arch-rival Ford, by contrast, fell by 1 percent compared with a year earlier, and sales by the still-troubled Volkswagen brand in the U.S. eased by 8 percent.

Meanwhile, among the relative-sales leaders were Nissan, which posted an 18-percent increase over a year ago, and Chrysler, which notched a 14-percent gain over April 2013.

In assessing the increase, GM executives in a news release were careful to step around the subject of the recall. “Retail demand was steady in April, and truck sales and transaction prices were especially strong,” said Kurt McNeil, U.S. vice president of sales operations for GM. He also cited a strengthening economy and “our award-winning new products.”

And indeed, if GM didn’t have such a strong lineup of new and almost-new vehicles, publicity over the safety recall may have become a much bigger drag. As it was, sales of the new Cadillac CTS rose by 68 percent, for instance; sales of the surprising new Chevrolet Impala rose by 27 percent; Buick continued to surprise despite the lack of very recent new-product news, up 12 percent for the brand’s best April since 2006, and even sales of the new Chevrolet Silverado were up 9 percent after a rough first quarter.

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VW Quarterly Profit Beats Estimates on Porsche Deliveries


Via Bloomberg

Volkswagen AG, Europe’s largest automaker, said first-quarter operating profit rose 22 percent, helped by record sales at the luxury Porsche and Audi brands.

Earnings before interest and taxes increased to 2.86 billion euros ($3.97 billion) from 2.34 billion euros a year earlier, the Wolfsburg, Germany-based manufacturer said in a statement today. Profit beat the 2.74 billion-euro average of nine analyst estimates compiled by Bloomberg. Revenue gained 2.7 percent to 47.8 billion euros.

VW said last month that its annual sales may exceed 10 million vehicles for the first time in 2014, four years earlier than planned. That includes deliveries by MAN SE and Scania AB, the truck divisions in which VW is seeking full ownership. Those takeovers, and plans to introduce 100 new or revamped cars through next year, are part of a strategy to overtake Toyota Motor Corp. as the global leader in auto sales by 2018.

“From a strategic point of view, the product and brand position of Volkswagen AG is the envy of the industry,” said Roman Mathyssek, a Munich-based analyst at consulting company Strategy Engineers GmbH. “They still have potential to improve further in terms of products, costs and market presence in the years to come.”

Still Counting

The German carmaker said it’s still tallying the shares that investors have pledged in the company’s 6.7 billion-euro tender for full ownership of Scania. The offer expired April 25. Volkswagen said it plans to publish the results soon.

VW already controls 62.6 percent of Scania’s capital via direct and indirect holdings, and it’s offering 200 kronor a share for the rest of the Soedertaelje, Sweden-based company. That’s 36 percent more than the truckmaker’s closing price before the bid was announced in February.

Volkswagen fell as much as 1.3 percent and was trading down 0.2 percent at 194.15 euros at 3:04 p.m. in Frankfurt. The shares have dropped 4.8 percent this year, valuing VW at 89.6 billion euros.

“The situation with Scania causes some uncertainty,” said Frank Schwope, a Hanover, Germany-based analyst at NordLB.

First-quarter operating profit at Porsche jumped 22 percent to 698 million euros, while earnings at the Audi premium division, the biggest contributor to group profit, increased 0.5 percent to 1.31 billion euros, Volkswagen said.

Models that Volkswagen is bringing out by the end of 2015 include new versions of the midsize VW Passat sedan and Audi A4. Among the fresh sport-utility vehicles are Audi’s Q7 and a new plug-in hybrid version of Porsche’s Cayenne.

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Honda Motor Forecasts 3.6 pct Net Profit Rise This FY, Below Estimates


Via Reuters

Honda Motor Co on Friday forecast a 3.6 percent rise in net profit for the year to next March, below analyst estimates, saying it expects strong sales of the remodelled Fit compact car globally including in the United States.

Honda said it expects to post 595 billion yen ($5.8 billion) in net profit this business year, compared with the 700 billion yen mean estimate of analysts polled by Thomson Reuters I/B/E/S.

For the latest quarter to end-March, Japan’s third-biggest automaker more than doubled net profit to 170.5 billion yen, boosted by a decline in the value of the yen and strong sales in China and Japan.

Shares of Honda closed 1.0 percent higher ahead of the result, compared with a 0.2 percent gain in the benchmark index.

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VW’s Forecast Profit Gain Seen Masking Margin Troubles


Via Reuters

The record quarterly earnings which Volkswagen AG is set to report next week may mask more fundamental problems for the German auto maker.

While a 5.8 percent increase in first-quarter deliveries, which VW revealed earlier this month, will help Europe’s biggest carmaking group meet its 10 million vehicle sales goal four years early, profitability gains are not keeping pace with the group’s rapid expansion.

Behind the scenes there is evidence of faltering competitiveness at the core VW brand, some analysts say, and the group faces a struggle to both raise output and margins.

The group’s 2013 figures, released in March, showed revenue surging by a quarter over three years to reach almost 200 billion euros ($276.6 billion) – for comparison, about the size of Israel’s GDP.

But yearly operating profit rose just 3.5 percent to 11.7 billion, held back by increasing investment and labor costs. VW’S global workforce swelled to 573,000 in 2013, up over 40 percent from 2010, and it splashed out on a generous 5.6 pct two-step pay rise last year for workers in high-wage Germany.

First-quarter 2014 results, due on April 29, may underline the need for further action, said London-based analyst Arndt Ellinghorst at brokerage ISI Group, who expects the core VW division’s operating margin to fall to 2.3 percent from 3.3 percent.

The quarterly figures are forecast to show group operating profit up 17 percent to 2.74 billion euros, a Reuters poll of 11 banks and brokerages showed.

But that is only part of the picture.

“Cost pressures keep growing and the namesake brand is VW’s biggest trouble spot,” said Ellinghorst, citing negative currency effects, depreciation costs and slowing emerging-market growth among the company’s hurdles.

To boost efficiency across the 310-model empire, VW is reviewing strategy and updating business goals as it seeks to narrow the profitability gap with Toyota Motor Corp and Hyundai Motor Co.

To expand margins, VW is increasingly relying on its modular platforms allowing it to cut production costs and build vehicles more rapidly.

Chief Executive Martin Winterkorn has confirmed challenges persist despite increasing profits, saying in a recent magazine interview: “It’s our job to build great and valuable cars and at the same time to increase the margin.”

MARGIN TARGET

Despite early doubts among analysts about potential synergies, VW expects to save 1 billion euros in production costs this year as the number of cars built on the new so-called MQB platform may almost double to 2 million and rise to 4 million by 2016.

VW stock, down 1.6 percent at 193.15 euros by 1247 GMT on Friday, hit a record 205 euros early this year and has outpaced Germany’s DAX index .GDAXI of blue chip stocks by some 5 percent through the past 12 months. But it has lagged the STOXX Europe 600 autos index .SXAP by some 15 percent in that time.

It trades on a multiple of 9.2 times current-year forecast earnings, a discount to the 10.7 multiple of its peer group, according to Reuters data.

VW is targeting a margin of more than 6 percent for the mass-market car brand, which accounted for almost two-thirds of the group’s 2.4 million vehicle sales in the first quarter (excluding MAN SE (MANG.DE) and Scania AB (SCVb.ST) heavy trucks). That compares with auto division margins of 8.8 percent at Toyota and 9 percent at Hyundai last year.

Ellinghorst nonetheless expects VW’s group operating profit to rise to a record 12.6 billion euros this year on improving European sales of luxury Audi and Porsche models.

Wolfsburg-based VW has used resilient gains from both premium marques to help sustain investment even as a slump in European car markets sent French and Italian peers into the red.

RETAIL INCENTIVES

But generating cash to fund global expansion is getting harder as VW balances short-term costs, such as 4.6 billion euros in 2013 adverse currency effects and rising distribution outlays, with upgrades and additions to its multi-brand lineup.

In an indication of its struggle to maintain sales, confidential industry findings from one market research firm showed VW brand models having the biggest increase in average retail incentives in the European sector in the first quarter.

VW discounts rose by a third to nearly 2,400 euros per car, narrowing the gap with an industry average of about 2,750 euros, according to the data for Germany, Britain, France, Italy and Spain.

“Incentives are the very first thing customers ask about,” said Ernst-Robert Nouvertne, who runs two VW dealerships near the German city of Cologne. “I don’t think we’ll ever get back down from that relatively high level.”

European car markets, which make up 40 percent of VW group sales, posted a seventh straight monthly gain in March following a six-year slump that cut registrations to a 20-year low.

VW in February toned down its 2014 operating profit guidance, saying earnings will improve only if economic conditions pick up faster than currently forecast, particularly in Europe.

Hanover-based analyst Frank Schwope at banking group NordLB said profitability may also benefit from deepening cooperation with Porsche, which VW acquired in 2012, and plans to align truckmakers MAN and Scania.

VW is seeking full control of Scania to forge a truck alliance with MAN and its own commercial-vehicle division and its 200 Swedish crowns per share offer to remaining Scania shareholders expires at 1500 GMT on Friday.

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Toyota Q3 Profit Falls 47.6 Percent, F’casts Lifted


TOKYO – Toyota Motor Corp reported a 47.6 percent drop in quarterly profits, hit by slumping Japanese car sales and a firm yen, highlighting its damaging exposure to the loss-making export business.

Nissan and Honda are also seen suffering a drop in third-quarter profits due to the stronger yen and falling demand in Japan, but the decline at Toyota is set to be the deepest given its heavier exposure to unprofitable exports from Japan, reported Reuters.

Toyota exported more than half of its Japan-made vehicles last year, making a loss on many of them with the dollar well below the rate of 90 yen that President Akio Toyoda has said is the minimum to keep Japan’s manufacturing sector competitive.

For the full year to March 31, the world’s biggest automaker lifted its forecast for annual operating profit to 550 billion yen ($6.68 billion) from a cautious 380 billion yen, after profits for the first nine months exceeded that figure.

A survey of 23 analysts by Thomson Reuters I/B/E/S forecast annual operating profit of 489 billion yen for Toyota, trailing expected earnings at smaller rivals Nissan Motor Co and Honda Motor Co.

The carmaker also nudged up its global sales forecast to 7.48 million vehicles from 7.41 million, with domestic sales expected to reach 2.02 million vehicles compared with an earlier prediction of 1.99 million. It kept its U.S. forecasts unchanged at 2.09 million units.

Toyota’s October-December operating profit was 99.07 billion yen, down from 189.1 billion yen in the same period a year earlier, while net profit fell 38.9 percent to 93.63 billion yen.

Wide-ranging estimates from nine analysts surveyed by Reuters put Toyota’s third-quarter operating profit at an average 70.6 billion yen. Profits made in China are not counted on the operating level at Toyota, which reports under U.S. accounting rules.

Toyota, which stayed ahead of General Motors Co as the world’s biggest automaker by a thinner margin last year, built 3.28 million vehicles in Japan last year, compared with 992,000 for Honda and 1.13 million for Nissan.

Toyota shares have risen 18 percent in the past three months versus a 13 percent gain in Tokyo’s broad TOPIX. Honda gained 22 percent and Nissan rose 13 percent.

Before the results were announced on Tuesday, Toyota ended trading unchanged from the previous day at 3,490 yen, while the TOPIX gained 0.4 percent.

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