Wednesday, November 7th, 2007
Toyota Profit Boosted by Higher Sales and Weaker Yen
By Jason Simpkins
Associate Editor
Toyota Motor Corp. (TM) will likely report a rise in net income for the ninth straight quarter when it releases its earnings statement today (Wednesday). According to estimates compiled by Bloomberg News, the company’s net income probably rose 9.4% to 444 billion yen ($3.9 billion) in the third quarter. The analysts estimate sales rose 4.6% to 6.1 trillion yen ($53.2 billion).
Toyota increased its sales in emerging economies in the quarter, offsetting declines in the United States and Japan, the company said. Sales in emerging markets, including the Middle East and South America, have risen at more than twice the pace of the North American market over the past four years. In the third quarter, sales in the United States dipped 5% from a year ago.
Meanwhile, vehicle sales in Europe gained 8% to 297,000, and sales in China climbed by 57% to 136,000. Toyota hopes to be selling a million vehicles a year in China in five to 10 years. So far this year, sales in Russia, where Toyota plans to open a factory by the end of 2007, have climbed 62%.
Three analysts polled by Thomson Financial forecasted first-half operating profit of between 1.2 trillion yen ($10.5 billion) and 1.28 trillion yen ($11.17 billion). In the same period last year, Toyota reported a record operating profit of 1.08 trillion yen ($9.43 billion) on revenue of 11.47 trillion yen ($100.17 billion) also an all-time high.
"Smaller markets have led growth for Toyota as sales in the U.S. and Japan have slumped," Koichi Ogawa of Daiwa SM Investments in Tokyo told Bloomberg.
"Toyota may follow Honda and Denso in raising its forecast if second-quarter earnings are strong."
A weak yen provided an added cushion for Toyota’s increased sales in foreign markets. The Japanese currency dropped 1.4% against the dollar and 8.5% against the euro in the second quarter of the year. A drop of one yen against the dollar and euro increases Toyota’s operating profit by 35 billion yen ($305.65 million) and 5 billion yen ($43.664 million), respectively.
News and Related Story Links:
- Money Morning:
Three Ways to Profit From High Gasoline Prices
- Money Morning:
Soaring Oil Prices Spell Trouble For Emerging Markets
Jim Rogers: China’s Expansion Depends on Water
Oil isn’t China’s most precious resource. China must spend $162 billion in the next five years to clean up its polluted rivers-as nearly 40% of them are undrinkable. "China has a huge water problem," Legendary investor Jim Rogers says. "…If they don’t solve it, or if they don’t solve it in time, then China has failed." Find out which six global water treatment powerhouses are set to make “liquid profits.”
