Toyota expects its profits to fall 80% in the next year

Toyota Motor (NYSE: TM) reported an operating profit of 384 billion yen ($ 3.58 billion) for the quarter ended March 31, 27.5% less than a year ago, and warned that the continuing effects of the COVID-19 pandemic could boost its operating profit fell nearly 80% in the next four quarters.

But despite the warning, Toyota said it will maintain its pre-outbreak levels for new products and capital expenditures, more than $ 10 billion in the next fiscal year, as it expects demand for new vehicles in the US. USA And Europe fully recovers in the first half of 2021.

What Toyota said about next fiscal year
At a press conference, CEO Akio Toyoda said he expects the decline in vehicle sales following the coronavirus pandemic to be “greater than during the Lehman crisis.” But, he said, because Toyota hopes to remain profitable in the coming fiscal year, it will continue to invest in new products and future technologies, including autonomous vehicles.

Here’s Toyota’s official guide to automotive investors for the fiscal year ending March 31, 2021:

  • Total sales of approximately 8.9 million vehicles, including sales of its joint ventures in China. (Fiscal 2020: 10,457,000.)
  • Revenue of 24 trillion yen. (Fiscal 2020: 29,929 trillion yen).
  • Operating income of 500 billion yen. (2020: 2,442 trillion yen).
  • 2.1% operating margin. (2020: 8.2%.)

Toyota’s forecasts assume average exchange rates for the year of 105 yen to the US dollar and 115 yen to the euro.

How Toyota Performed in the Quarter

Toyota didn’t give investors much color about its regional results, aside from the obvious impact of the COVID-19 outbreak, but here are the numbers.

  • In Japan, Toyota’s operating income fell to 336 billion yen from 446.2 billion yen in the year-ago quarter, and its operating margin fell to 8.4% from 9.9%. Sales fell to around 583,000 vehicles from 631,000 a year ago.
  • In North America, Toyota’s operating loss worsened to 39 billion yen from 19.5 billion yen a year ago, and its operating margin fell to 1.6% negative from 0.7% negative. Sales fell to approximately 600,000 vehicles from 654,000 a year ago.
  • In Europe, Toyota’s operating profit fell to 31 billion yen from 34.1 billion yen a year ago, and its operating margin fell to 3.8% from 3.9%. Sales fell to approximately 259,000 vehicles from 269,000 a year ago.
  • Toyota reports revenue for its business in China a quarter ago, meaning that revenue for the quarter ended March 31 was obtained in the fourth quarter of calendar year 2019. For that quarter, Toyota’s operating revenue fell to $ 17.7 billion. yen from 18.6 billion yen. in the fourth quarter of 2018, while capital revenues from Toyota joint ventures with Chinese automakers increased to 23.9 billion yen from 20.2 billion yen in the same period last year.
  • During the quarter ended March 31, Toyota sales in China fell to approximately 189,000 from approximately 326,000 a year earlier.
  • In Asia, excluding China and Japan, Toyota’s operating income fell to 57.7 billion yen from 58.7 billion yen a year ago, but its operating margin increased slightly, to 4.2% from 4.2%. Sales fell by approximately 40,000 vehicles to approximately 370,000.
  • In Toyota’s “rest of the world” region, including Latin America, Oceania, Africa and the Middle East, operating income increased to 9.2 billion yen from 5.2 billion years ago, and its operating margin increased to 1.9% of 1%. Sales increased by approximately 5,000 vehicles from a year ago, to approximately 317,000.
    Toyota’s financial services subsidiary generated just 1.7 billion yen in operating income in the quarter, up from 78.4 billion yen in the same period last year.

Special items and liquidity
Toyota took one-time charges totaling 305.2 billion yen in the quarter, all of which were non-monetary accounting charges, as it recognized unrealized losses on equity investments. One-off loans of 16.2 billion yen were required for unrealized gains in the prior year quarter.

As of March 31, Toyota had 2.774 trillion yen (about $ 25.9 billion) in cash available for its automotive business, down from 2.79 trillion yen at the end of the previous fiscal year.

Toyota noted that in April, it established a new revolving line of credit totaling 1.25 trillion yen ($ 11.65 billion), to bolster its balance sheet against the risk that the pandemic may have a longer-lasting impact than it currently has. wait.

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