Toyota Profits Forecasted to be Triple that of GM
08-02-13, 07:45 AM
#1
Toyota Profits Forecasted to be Triple that of GM
Toyota is expected to report $4.5 billion in profits for the quarter ended in June, which would be triple General Motors‘ announcement of $1.4 billion.
GM reported last week that net income had fallen 23 percent as its European operations continue to post losses. Meanwhile, Toyota has seen a surge of profits behind a weakening yen as the Japanese automaker’s Camry and Prius models is forecasted to have its highest annual profit in six years.
Toyota’s stock shares have outperformed all other automakers after surging 55 percent this year, adding more than $77 billion in market value. The Japanese automaker and its subsidiaries has sold 2.48 vehicles globally last quarter, which is actually less than GM’s 2.49 million. In addition, Toyota’s market share in the U.S. fell to the lowest in five quarters while GM’s market share has climbed to its highest in four quarters, according to data from Bloomberg.
And even though GM’s net income fell last quarter, its profit excluding one-items beat analyst estimates.
GM reported last week that net income had fallen 23 percent as its European operations continue to post losses. Meanwhile, Toyota has seen a surge of profits behind a weakening yen as the Japanese automaker’s Camry and Prius models is forecasted to have its highest annual profit in six years.
Toyota’s stock shares have outperformed all other automakers after surging 55 percent this year, adding more than $77 billion in market value. The Japanese automaker and its subsidiaries has sold 2.48 vehicles globally last quarter, which is actually less than GM’s 2.49 million. In addition, Toyota’s market share in the U.S. fell to the lowest in five quarters while GM’s market share has climbed to its highest in four quarters, according to data from Bloomberg.
And even though GM’s net income fell last quarter, its profit excluding one-items beat analyst estimates.
08-02-13, 07:46 AM
#2
Toyota projected to triple GM's quarterly profits
TOKYO (Bloomberg) -- Toyota Motor Corp. probably earned $3 in profit for every dollar earned by General Motors Co. in the latest quarter, analysts predict.
The Japanese carmaker may report tomorrow that profit climbed 52 percent to 441.2 billion yen ($4.5 billion) in the quarter ended June, according to the average of four analyst estimates compiled by Bloomberg. By comparison, GM reported last week that net income fell 23 percent to $1.4 billion as European operations continued to post losses.
While Toyota has been losing U.S. market share to Detroit's resurgent automakers, the profit surge shows how Prime Minister Shinzo Abe's efforts to weaken the yen are benefiting Japanese exporters by bolstering the value of products sold overseas. After four years of battling a recall crisis, strong yen and natural disasters, the maker of the Camry sedan and Prius hybrid is forecasting its highest annual profit in six years.
"Toyota is doing the right things in not trying to increase market share, but trying to raise profit margins," said Edwin Merner, president of Atlantis Investment Research Corp. in Tokyo. "If volumes were sharply down, like 20 to 30 percent, I would worry."
Toyota shares have outperformed all major automakers by surging 55 percent in 2013, adding more than $77 billion in market value, after the yen began declining against other currencies since late last year. The stock is trading at about 10 times projected profits for next year, the highest multiple among the world's five biggest carmakers. Investors have also become more optimistic on a price-to-sales basis since 2011.
Closing in
The stock gain since 2011 has coincided with improving profit margins. Toyota's net profit margin rose to 4.4 percent in the fiscal year that ended March 31 from 1.5 percent a year earlier. It may increase to 6.7 percent in the current fiscal year, according to analyst estimates compiled by Bloomberg. GM, Ford Motor Co. and Volkswagen AG profit margins may slide this year before rising again in 2014, according to analysts' estimates.
Toyota and its subsidiaries sold 2.48 million vehicles globally last quarter, shy of GM's 2.49 million, as Japan's largest manufacturer saw demand fall at home and competition intensify in the U.S.
In North America, the company is facing revitalized U.S. automakers that are registering solid sales gains each month. Operating profit from the region last quarter probably reached 117.8 billion yen, little changed from a year earlier, according to the median in a Bloomberg News survey of four analysts.
Toyota's deliveries in the U.S., its biggest overseas market, rose by 3.7 percent -- less than half the pace of the industry -- and its market share in the country fell to the lowest in five quarters, according to data compiled by Bloomberg. By comparison, GM's market share climbed to the highest in four quarters, while Ford saw its share increase to the highest in six quarters.
GM is transforming its lineup into one of the market's newest from one of the oldest as it prepares to bring 18 new or refreshed vehicles into showrooms this year, including the redesigned Impala. While net income fell last quarter, profit excluding one-time items beat analyst estimates.
Favorable rates
Some Japanese automakers are taking advantage of favorable exchange rates. Nissan Motor Co., Japan's second-largest carmaker, saw U.S. deliveries surge 20 percent last quarter after cutting prices of seven models in the U.S., including its top-seller, the Altima sedan.
The yen has weakened 12 percent against the dollar this year and last week traded at 100 versus the greenback. The Japanese currency may weaken further to 105 in the fourth quarter, according to the median of estimates compiled by Bloomberg.
That's helped bolster Toyota's earnings in Japan, the company's main export base. Earnings from home in the quarter ended June probably surged 86 percent to 199 billion yen, according to the Bloomberg survey.
Japan demand
In terms of demand, Japan's a different story. Deliveries in the country fell 8.4 percent, extending their decline after government incentives for fuel-efficient models expired last year. Japanese vehicle sales have fallen steadily since the asset bubble burst in 1989, with temporary boosts from government subsidies.
In Asian markets outside of Japan, Toyota's operating income probably fell for a second consecutive quarter as Japanese carmakers continue to underperform the industry in China, the world's largest auto market. Profit from Asia, excluding Japan, dropped 0.8 percent to 100.8 billion yen last quarter, according to the median analyst estimate.
In China, where a territorial dispute led to a consumer backlash that cut demand for Japanese products last year, Toyota continued to lose market share to GM and VW. Toyota's deliveries climbed 0.6 percent last quarter, versus GM's 12 percent and VW's 16 percent, according to figures reported by the companies.
Demand for Japanese products in China, the world's largest auto market, is recovering from last year and Toyota is targeting this year's deliveries to rise to at least 900,000 units.
In Europe, where auto demand is slumping to its lowest level in two decades, Toyota probably generated profit of 5.7 billion yen, or 1 cent in profit for every dollar in sales, according to the median analyst estimate. Sales of Toyota and Lexus cars in the region were also little changed, keeping Toyota's market share at about 4.5 percent.
The Japanese carmaker may report tomorrow that profit climbed 52 percent to 441.2 billion yen ($4.5 billion) in the quarter ended June, according to the average of four analyst estimates compiled by Bloomberg. By comparison, GM reported last week that net income fell 23 percent to $1.4 billion as European operations continued to post losses.
While Toyota has been losing U.S. market share to Detroit's resurgent automakers, the profit surge shows how Prime Minister Shinzo Abe's efforts to weaken the yen are benefiting Japanese exporters by bolstering the value of products sold overseas. After four years of battling a recall crisis, strong yen and natural disasters, the maker of the Camry sedan and Prius hybrid is forecasting its highest annual profit in six years.
"Toyota is doing the right things in not trying to increase market share, but trying to raise profit margins," said Edwin Merner, president of Atlantis Investment Research Corp. in Tokyo. "If volumes were sharply down, like 20 to 30 percent, I would worry."
Toyota shares have outperformed all major automakers by surging 55 percent in 2013, adding more than $77 billion in market value, after the yen began declining against other currencies since late last year. The stock is trading at about 10 times projected profits for next year, the highest multiple among the world's five biggest carmakers. Investors have also become more optimistic on a price-to-sales basis since 2011.
Closing in
The stock gain since 2011 has coincided with improving profit margins. Toyota's net profit margin rose to 4.4 percent in the fiscal year that ended March 31 from 1.5 percent a year earlier. It may increase to 6.7 percent in the current fiscal year, according to analyst estimates compiled by Bloomberg. GM, Ford Motor Co. and Volkswagen AG profit margins may slide this year before rising again in 2014, according to analysts' estimates.
Toyota and its subsidiaries sold 2.48 million vehicles globally last quarter, shy of GM's 2.49 million, as Japan's largest manufacturer saw demand fall at home and competition intensify in the U.S.
In North America, the company is facing revitalized U.S. automakers that are registering solid sales gains each month. Operating profit from the region last quarter probably reached 117.8 billion yen, little changed from a year earlier, according to the median in a Bloomberg News survey of four analysts.
Toyota's deliveries in the U.S., its biggest overseas market, rose by 3.7 percent -- less than half the pace of the industry -- and its market share in the country fell to the lowest in five quarters, according to data compiled by Bloomberg. By comparison, GM's market share climbed to the highest in four quarters, while Ford saw its share increase to the highest in six quarters.
GM is transforming its lineup into one of the market's newest from one of the oldest as it prepares to bring 18 new or refreshed vehicles into showrooms this year, including the redesigned Impala. While net income fell last quarter, profit excluding one-time items beat analyst estimates.
Favorable rates
Some Japanese automakers are taking advantage of favorable exchange rates. Nissan Motor Co., Japan's second-largest carmaker, saw U.S. deliveries surge 20 percent last quarter after cutting prices of seven models in the U.S., including its top-seller, the Altima sedan.
The yen has weakened 12 percent against the dollar this year and last week traded at 100 versus the greenback. The Japanese currency may weaken further to 105 in the fourth quarter, according to the median of estimates compiled by Bloomberg.
That's helped bolster Toyota's earnings in Japan, the company's main export base. Earnings from home in the quarter ended June probably surged 86 percent to 199 billion yen, according to the Bloomberg survey.
Japan demand
In terms of demand, Japan's a different story. Deliveries in the country fell 8.4 percent, extending their decline after government incentives for fuel-efficient models expired last year. Japanese vehicle sales have fallen steadily since the asset bubble burst in 1989, with temporary boosts from government subsidies.
In Asian markets outside of Japan, Toyota's operating income probably fell for a second consecutive quarter as Japanese carmakers continue to underperform the industry in China, the world's largest auto market. Profit from Asia, excluding Japan, dropped 0.8 percent to 100.8 billion yen last quarter, according to the median analyst estimate.
In China, where a territorial dispute led to a consumer backlash that cut demand for Japanese products last year, Toyota continued to lose market share to GM and VW. Toyota's deliveries climbed 0.6 percent last quarter, versus GM's 12 percent and VW's 16 percent, according to figures reported by the companies.
Demand for Japanese products in China, the world's largest auto market, is recovering from last year and Toyota is targeting this year's deliveries to rise to at least 900,000 units.
In Europe, where auto demand is slumping to its lowest level in two decades, Toyota probably generated profit of 5.7 billion yen, or 1 cent in profit for every dollar in sales, according to the median analyst estimate. Sales of Toyota and Lexus cars in the region were also little changed, keeping Toyota's market share at about 4.5 percent.
Read more: http://www.autonews.com/article/2013...#ixzz2ap6EInPK
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08-02-13, 08:02 AM
#4
Lexus Fanatic
Except for the stockholders, big profits alone does not necessarily mean that an auto manufacturer is doing everything right. It sometimes means that the company is using cheap materials in the design and construction of their cars. We know that the quality and solidness of some Toyota parts declined in the last 7-8 years, though, in fairness, that seems to have been reversed with some with their very latest new 2012-2014 models. And, as the article noted, the Yen-Dollar relationship also plays a role.
08-02-13, 08:55 AM
#5
Lexus Fanatic
Except for the stockholders, big profits alone does not necessarily mean that an auto manufacturer is doing everything right. It sometimes means that the company is using cheap materials in the design and construction of their cars. We know that the quality and solidness of some Toyota parts declined in the last 7-8 years, though, in fairness, that seems to have been reversed with some with their very latest new 2012-2014 models. And, as the article noted, the Yen-Dollar relationship also plays a role.
Just look at the Tacoma, Avalon, upcoming Highlander, 14 Tundra, LS460, GS350 they all using the same powertrains and or similar platforms
GM has a lot more top down platforms changes etc.
08-02-13, 09:13 AM
#6
Except for the stockholders, big profits alone does not necessarily mean that an auto manufacturer is doing everything right. It sometimes means that the company is using cheap materials in the design and construction of their cars. We know that the quality and solidness of some Toyota parts declined in the last 7-8 years, though, in fairness, that seems to have been reversed with some with their very latest new 2012-2014 models. And, as the article noted, the Yen-Dollar relationship also plays a role.
it means customers are buying cars you are making, so yes, the ultimate goal of any manufacturer is profits and thats how their success is measured.
08-02-13, 09:33 AM
#7
Lexus Fanatic
Sure, a company has to make profits.....otherwise it can't stay in buisness, But my earlier point was that profits alone (or losses) don't tell the whole story. In the 90s, for example, the then-new Saturn division opened up an entire new world of customer-friendliness, satisfaction, smartly-designed small cars, and easy deals/service. But the division itself, despite its then-enormous success, was not particularly profitable. Still, it would have survived if GM's management hadn't screwed it up so badly after 2000.
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08-02-13, 09:55 AM
#8
Lexus Champion
Shareholders (and analysts) like immediate profits but that short-term thinking can cost the company dearly in the longer-term. Short-term profits (and increased share price) may come from ignoring the future. There may not be enough longer-term planning, resulting in no investment in building future product.
08-02-13, 09:58 AM
#9
Sure, a company has to make profits.....otherwise it can't stay in buisness, But my earlier point was that profits alone (or losses) don't tell the whole story. In the 90s, for example, the then-new Saturn division opened up an entire new world of customer-friendliness, satisfaction, smartly-designed small cars, and easy deals/service. But the division itself, despite its then-enormous success, was not particularly profitable. Still, it would have survived if GM's management hadn't screwed it up so badly after 2000.
so it wasnt profitable and it failed?
08-02-13, 09:58 AM
#10
Guest
Posts: n/a
I kinda agree with you, but in the case of Toyota, they have huge profit levels right now because they have not done much with their powertrains etc. Toyota is essentially using the same piwertrains since 2005 with a few exceptions.
Just look at the Tacoma, Avalon, upcoming Highlander, 14 Tundra, LS460, GS350 they all using the same powertrains and or similar platforms
GM has a lot more top down platforms changes etc.
Just look at the Tacoma, Avalon, upcoming Highlander, 14 Tundra, LS460, GS350 they all using the same powertrains and or similar platforms
GM has a lot more top down platforms changes etc.
1. They did make a crapload of new engines, just no replacement for the 3.5
2. That is only a small portion of their financial picture.
What we do know is the Asian companies learned how to be profitable with a strong yen and now that the yen is weakening it simply means more profit.
08-02-13, 10:05 AM
#11
Lexus Fanatic
It failed, not because of money/profit issues, but because of classic mismanagement that ruined Saturn's superb image and its original purpose in the 1990s. The decline basically started with the demise of the plastic-bodied S-series after 2000....and, of course, the division never really recovered.
I don't mean to dwell too much on Saturn...the main thread topic, of course, is Toyota's profits. I brought it up mainly to ilustrate that, though a company does have to make adequate profits, profits alone aren't necessarily the measure of its (ultimate) success or failure.
I don't mean to dwell too much on Saturn...the main thread topic, of course, is Toyota's profits. I brought it up mainly to ilustrate that, though a company does have to make adequate profits, profits alone aren't necessarily the measure of its (ultimate) success or failure.
08-02-13, 10:18 AM
#12
I kinda agree with you, but in the case of Toyota, they have huge profit levels right now because they have not done much with their powertrains etc. Toyota is essentially using the same piwertrains since 2005 with a few exceptions.
Just look at the Tacoma, Avalon, upcoming Highlander, 14 Tundra, LS460, GS350 they all using the same powertrains and or similar platforms
GM has a lot more top down platforms changes etc.
Just look at the Tacoma, Avalon, upcoming Highlander, 14 Tundra, LS460, GS350 they all using the same powertrains and or similar platforms
GM has a lot more top down platforms changes etc.
Why do they sell cars at higher prices? Because customers decided so.
Very simple.
08-02-13, 10:25 AM
#13
Lexus Fanatic
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Except for the stockholders, big profits alone does not necessarily mean that an auto manufacturer is doing everything right. It sometimes means that the company is using cheap materials in the design and construction of their cars. We know that the quality and solidness of some Toyota parts declined in the last 7-8 years, though, in fairness, that seems to have been reversed with some with their very latest new 2012-2014 models. And, as the article noted, the Yen-Dollar relationship also plays a role.
Also the 2014 Tundra has a much improved interior, as does the redesigned 2014 Corolla. The Corolla interior is a huge leap from the dated 2013 model.
Then we also have the redesigned 2014 Highlander, which has an excellent interior for its class, arguably class-leading, and is a big step up from the previous-gen 2013 Highlander.
Even the refreshed 2014 4Runner gets an improved interior with some welcome upgrades. I expect the Sienna soon to get a refresh with an interior upgrade.
I'm very eager to see how the Camry will be improved, as I expect big things and big improvements.
Exactly. This is great news, as this means Toyota can invest MORE into research and development, and MORE back into future products. This news will also help Akio Toyoda greenlight further exciting and passionate new models.
Last edited by TRDFantasy; 08-02-13 at 10:29 AM.
