Toyota Motor Q1 net profit jumps 10 pct, beats estimates

Toyota Motor Corp. today posted a third straight year of record profit for its first quarter as cost cuts and currency gains made up for slightly weaker vehicle sales. That beat expectations: Analysts polled by Thomson Reuters had expected a 607.5 billion yen profit.

Mitsubishi Corporation plummeted 6.9% to 2,467 yen after the trading company reported net sales in the first-quarter ending in June dropped 3.9% to 1.82 trillion yen from 1.89 trillion yen in a year ago period. The automaker said last week that it sold 5.02 million vehicles in the six months through June, trailing the 5.04 million that Volkswagen reported.

Toyota’s shares ended down 1.0 per cent ahead of the earnings results, while the broader Tokyo market closed flat.

“Unexpected, massive recalls are a sizable risk for any automaker”.

Income from China fell sharply by 56% to 12.4 billion yen. That’s exceptionally strong. But favorable exchange-rate shifts added much more.

That is partly because of a weaker yen, which makes Toyota’s exports more profitable.

But the market was anxious about Toyota’s operations in China.

The monetary base in July soared 32.8% to 325.74 trillion yen after 34.2% decline in June, the Bank of Japan said. Other regions such as Central and South America, Oceania, Africa and the Middle East also showed a decline in sales to a combined total of 380,240 vehicles sold.

Toyota has lifted the three-year freeze on new factories.

On Tuesday, Toyota said it will begin production of another new assembly line in Tianjin, China, by mid-2018.

Last quarter, sales in the key North American market rose, while they turned down in Europe and Asia, including Toyota’s home market Japan, where consumer spending dived after the government hiked sales taxes past year.

Domestic Chinese automakers are boosting production and sales of affordable small SUVs and competing aggressively with the global brands on price; that has put particular pressure on Toyota’s popular RAV4 model.

Toyota also reiterated its previous guidance for full-year net income (2.25 trillion yen, or $18.13 billion).