Despite Recalls, Toyota Makes Money; Expects Big Profits This Year
By Michelle Krebs May 11, 2010Despite global recalls, Toyota Motor Corp. reversed direction and made money in its recently 
closed fiscal year. The automaker predicted even heftier profits for the new year, indicating the recalls are little more than a hiccup as far as Toyota's financial performance is concerned.
Toyota President Akio Toyoda warned in a statement that the automaker remains in "stormy waters," but he said was "sincerely grateful" to the company's constituencies for their efforts in helping Toyota "return to its normal state as soon as possible.
Toyota's earnings announcement comes a day after U.S. Transportation Secretary Ray LaHood announced in Japan that more fines could be levied against the automaker for foot-dragging on quality problems, and his department opened yet-another investigation into product safety, this time regarding Toyota trucks.
The Year By the Numbers
In the fiscal year that ended March 31, Toyota made about $2.3 billion, reversing a giant loss - its first in 59 years -- that Toyota reported in the previous year.
Highlights from Toyota's financial statements include:
- net income of $2.3 billion (209 billion yen) versus a loss of 437 billion yen in the 2009 fiscal year;
- operating profit of 148 billion yen with operating income improving in all regions of the world;
- global vehicle sales totaled 7.24 million units, down 330,000 units from the last fiscal year.
The Tumultuous Fourth Quarter
Evidence of the recalls being little more than a hiccup on Toyota's bottomline can be seen in its fourth-quarter (January to March 2010) results, when Toyota issued the bulk of its recalls and had to stop manufacturing some vehicles until repairs were made.
In the fourth quarter, Toyota's financial statement shows:
- net profit of $1.2 billion (112 billion yen), compared with a loss of 766 billion a year earlier.
- operating profit of 95.3 billion yen, versus an operating loss of 682.5 billion;
- revenue of 5.280 trillion yen, up from 3.536 trillion yen.
Rosy Outlook
Toyota is bullish on the 2010 fiscal year that started April 1. The automaker predicts vehicle sales will rise to 7.29 million units, net revenue will climb to 19.2 trillion yen and profits will soar. Toyota predicts operating income of 280 billion yen and net profits of 310 billion yen or $3.4 billion -- a 48-percent increase.
Toyota will reward shareholders with a cash dividend if approved at its June stockholder's meeting.
Unfinished Recall Business
A day before Toyota announced its financial results, Transportation Secretary LaHood, meeting with Toyoda at the company's Japan headquarters, said Toyota may face more fines. Already, the department has levied the largest fine in history -- $16 million -- against Toyota.
Also on Monday, the U.S. National Highway Traffic Safety Administration opened another investigation.regarding the timeliness of Toyota disclosing a steering defect in some U.S. truck models.
The investigation is considering whether Toyota notified NHTSA within the required timeframe regarding steering relay rods in several models, In Japan, Toyota had recalled the trucks in 2004 after discovering the problem that could cause the driver to lose control of the vehicle. Toyota announced a recall of similar vehicles with similar problem in the U.S. a year later.
Toyoda said his company "has never hidden or misled" its customers. "There's no change in the fact that we are in stormy waters," Toyota's president told Reuters news service. "But now I feel that even in the storm, we can see a ray of sunlight in the distance." -- Michelle Krebs, Senior Analyst and Editor at Large
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