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Toyota earnings: Stock surges on boosted sales and profit outlook

Toyota says EV sales will drop but hybrids will pick up the slack

Toyota’s (TM) ADR-listed shares surged on Wednesday after the world’s largest automaker boosted its revenue and operating income forecast, citing improving operations and currency tailwinds. Toyota also raised its dividend and instituted a share buyback plan.

Toyota said it now sees sales revenue for its fiscal year 2024 at ¥43 trillion ($284.7 billion) up ¥5 trillion from its prior forecast, with operating income now rising to ¥4.5 trillion ($30 billion). “The forecast has been revised upward from the previous forecast in light of the impact of exchange rate fluctuations as well as efforts to improve profitability,” the company said in a statement.

Toyota said those efforts included cost reduction initiatives, moderating materials prices, marketing efforts to improve sales mix, and price increases will boost profits.

To that end, Toyota will also now buy back as much as ¥100 billion ($660 million) worth of shares, or 0.44% of its float, and boost its dividend by ¥30 ($0.20) a share.

Toyota did not, however, boost its global vehicle deliveries forecast, which remains at 11.38 million vehicles. While the company sees a decrease in sales due to “uncertainty” in markets such as China, the automaker sees improvements in areas like North America and other regions where a “robust market is expected” as well as in Europe where the company expects a recovery in supply.

A long row of unsold 2023 4Runner sports-utility vehicles sits at a Toyota dealership Tuesday, Oct. 10, 2023, in Centennial, Colo. (AP Photo/David Zalubowski)
A long row of unsold 2023 4Runner sports-utility vehicles sits at a Toyota dealership Tuesday, Oct. 10, 2023, in Centennial, Colo. (AP Photo/David Zalubowski) (ASSOCIATED PRESS)

Of note, Toyota sees its global forecast for BEV (battery electric vehicle) sales falling by nearly 40% to 123,000 vehicles, from its prior forecast of 202,000, with hybrid sales climbing to make up for the difference. Toyota did not say why it sees BEV sales falling, but it appears to be in line with what Ford and GM have been forecasting with EV demand slipping in the US due to high prices. On Tuesday, Toyota announced that it was expanding an upcoming battery plant in North Carolina with an additional investment of $8 billion, as it sees EV demand eventually climbing by 2025 in the US.

Looking at Toyota’s most recent quarter (July-September), the company reported sales revenue that hit ¥11.43 trillion ($76 billion), up 24% from a year ago, on operating income of ¥1.44 trillion ($9.5 billion), nearly tripling its level from last year. Toyota’s margin improved significantly to 11.2% from 4.7% a year ago, once again showing the effects of cost cutting, improving materials pricing, and better pricing and product mix.

“It’s a very good result, much bigger than we expected,” said Christopher Richter, senior analyst at CLSA Securities on Toyota’s performance and improved outlook. “We are in a recovery in the auto market after three years of a pandemic and the chip shortage.”

Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.

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