The Telegraph
Since 1st March, 1999
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Toyota profit stuns all

Tokyo, Nov. 5 (Reuters): Toyota Motor, Japan’s top auto maker, reported on Wednesday a surprise jump in six-month operating profit as healthy sales growth in the second quarter offset a weak start to the business year. Most analysts had expected Toyota’s half-year profits to be flat at best, after operating profit slipped 13 per cent in the April-June first quarter.

Toyota does not provide profit projections on a group basis, but it jacked up its parent-only profit and sales forecasts for the full year despite an expected blow from a weaker dollar.

Although analysts believe Toyota’s growth prospects are good thanks to its sound global expansion strategy, they said the dollar’s weakness presents considerable risk in the short term, putting pressure on its US business in the second half.

The dollar’s 10 yen weakening over the past few months prompted rival Honda Motor to reduce its full-year operating profit forecast last month. Third-ranked Nissan Motor left its projections unchanged but said that without the currency factor it would have raised its forecasts.

For April-September, Toyota’s group operating profit was up 12 per cent year-on-year at 767.77 billion yen ($7 billion). Net profit rose 23 per cent to 524.46 billion yen, as sales grew 8 per cent to 8.22 trillion yen.

Toyota is by far the most profitable car maker in the world and it continues to expand sales in all main markets — the United States, Japan, Europe and Asia — with a fast-growing model line-up and a reputation for building top-quality vehicles.

Toyota, also the world’s most valuable auto maker with a market capitalisation of $111 billion, has been particularly successful in the US, having expanded its market share to 11.2 per cent in the year to date from 10.4 per cent in 2002, mainly at the expense of Detroit’s “Big Three”.

While it trails General Motors and Ford Motor in global sales volume, Toyota far outstrips them in earnings. In the latest quarter, it earned 7.3 cents in net profit on each dollar in sales, compared with 9/10 of a cent for GM and a loss for Ford.

But analysts said that like GM, Ford and DaimlerChrysler’s Chrysler arm — Toyota was offering more consumer incentives to sell its cars.

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