Toyota profits hit record high as weak yen covers quality scandal
TOKYO, Aug. 1 Kyodo - Toyota Motor Corp. said Thursday its net profit in the three months to June rose 1.7 percent from a year earlier to a record 1.33 trillion yen ($8.9 billion), as a boost from a weaker yen offset losses caused by a series of quality scandals that have dogged the world's biggest automaker group.
Its group-wide sales fell 4.2 percent to 2.64 million units as the company partially halted domestic production after cheating in vehicle certification tests was uncovered across the group. Tough competition in China also contributed to the fall.
Operating profit rose 16.7 percent to 1.31 trillion yen on sales of 11.84 trillion yen, up 12.2 percent, the Japanese automaker said. Both figures are at an all-time high for the period.
The yen's depreciation lifted exports and inflated the group's overseas profits after repatriation, boosting its operating profit by 370 billion yen, the company said.
The average exchange rate for the period was 156 yen per U.S. dollar and 168 yen per euro, compared with 137 yen and 150 yen a year earlier. Every 1 yen fall against the dollar boosts its operating profit by 50 billion yen a year, the automaker said.
However, excluding the currency factor, operating profit shrunk as the fall in vehicle sales and rising labor costs took a toll, a company statement shows.
Toyota's vehicle sales in Japan dropped 20.8 percent, weighed down by the quality issues and a recent recall of the Prius hybrid car. They inched up in North America and Europe, thanks to brisk sales of its hybrid cars.
Sales in China saw a 17.6 percent decrease due to stiff price competition and the rise of locally made electric vehicles, the automaker said.
The series of vehicle certification misconduct cases at the world's biggest automaker group, ranging from data rigging to using testing standards not approved by the Japanese government, were uncovered in recent months, including at its small-car unit Daihatsu Motor Co. and affiliate Toyota Industries Corp., tarnishing their reputations as reliable manufacturers.
The earnings results came a day after the country's transport ministry said Toyota cheated in more model tests than it had previously admitted, sparking widespread concern that further problems could come to light.
Although the company declined to state the extent to which the recent scandals pushed down its profit, it said the overall impact on its full-year earnings was negligible.
Toyota maintained its forecast for the full year ending March, projecting its net profit to fall 27.8 percent to 3.57 trillion yen and sales to rise 2.0 percent to 46 trillion yen.
President Koji Sato has said the company will prioritize addressing quality issues this fiscal year rather than pursuing growth.
The earnings outlook is based on an exchange rate assumption of 145 yen to the dollar and 160 yen to the euro, both unchanged from the company's estimate in May. The dollar and euro currently trade at around 150 yen and 162 yen, respectively.
==Kyodo
