Reuters – Toyota Motor Corp upgraded its forecast for full-year operating profit by 8.1% as it expects a weaker yen to boost its bottom line even though its North American business is feeling the heat of fierce competition.
Japan's largest automaker now expects operating profit to come in at ¥2.0tn yen ($17.54bn) from a previous forecast of ¥1.85tn, based on a revised assumption that the yen will trade around ¥111 to the US dollar.
This implies the yen will fall further from its current rate of around ¥114 to the dollar, having already eased from ¥117 to the dollar since the beginning of the year.
The updated profit forecast number is more or less similar to last year’s operating profit of ¥1.99tn and in line with analysts’ forecasts of a profit of ¥2.04tn.
Toyota posted on Tuesday a 10% rise in operating profit for the second quarter as a positive currency impact and cost reductions offset lower vehicle sales at home and in North America.
Operating profit came in at ¥522.2bn, up from ¥474.6bn a year ago and above forecasts for ¥515.3bn from 11 analysts polled by Thomson Reuters I/B/E/S.
In July-September, the maker of the Prius gasoline hybrid and the RAV4 SUV crossover, sold around 672,000 vehicles in North America, its biggest market, versus around 684,000 a year ago.
Competition continues to ramp up in the US, where automakers are looking to boost sales of SUVs and less popular sedans by offering big discounts to buyers. This has raised marketing costs for Toyota and other automakers.
At home, sales fell 4.2% during the quarter to 543,000 units, while in Asia they rose 0.3% to 382,000 units.
Toyota also said on Tuesday it would buy back shares worth ¥250bn. The automaker has been regularly announcing share buyback plans over the past few years.