Toyota boosts profit forecast on yen outlook, deepens partnership with Suzuki

February 07, 2017

Toyota has followed Honda in lifting its annual profit guidance as the outlook for the yen fell. Toyota says that for the fiscal year until March 2017 it now expects net profit of ¥1.7 trillion yen (€14 billion), up from ¥1.55 trillion (€13 billion) – but this still falls short of analysts’ forecasts. It also increased its full-year revenue target by 1.9% to ¥26 trillion as sales of pickup trucks in North America beat forecasts. 

This brighter outlook came after a sharp rise in the US dollar after Donald Trump won the US presidential election in November, on a platform that raised hopes from stimulus measures and tax cuts in the US, a key market for the company. However, Trump’s pro-US policies have also met with hostility. 

Toyota is under pressure from the US administration to manufacture more cars in America rather than Mexico, with US trade seen as a key risk for the company going forwards, as well as Britain’s planned exit from the EU. The company makes about half the cars it sold in the US outside America. 

Toyota’s managing officer Tetsuya Otake said: ‘It’s extremely difficult at this point to forecast the impact of the Trump administration,’ adding: ‘We see the impact of the new US administration’s trade policies on global trade as an economic risk,’ and that Toyota also regards elections in France and Germany this year as well as the UK’s negotiations to leave the EU as risk factors. 

Rising labour and technology development costs caused a 23% fall in net profit to ¥486.5 billion (€4 billion) in the third quarter. 

Meanwhile, Toyota and smaller rival Suzuki have said they will launch formal talks to collaborate on environmental, safety and information technologies to combat this rise in development costs, as carmakers worldwide form alliances to help them meet increasingly fierce carbon dioxide regulations and develop autonomous technology. The deal is designed not to impinge anti-monopoly regulations. It is understood Suzuki aims to benefit from Toyota’s advanced technology expertise and Toyota hopes to learn from Suzuki’s strength in the growing Indian market. 

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March 31, 2017

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