Toyota returns; wants time to show it's changed

Sun Nov 4, 2012 3:59pm EST
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By Yoko Kubota

TOKYO (Reuters) - For most companies, trebling quarterly profit to almost $3 billion and outselling all global rivals would be welcome news. But for Toyota Motor Corp (7203.T: Quote), Japan's biggest car maker, it's still too early to say it has emerged from years of crisis.

Toyota is likely to say later on Monday that it earned a net profit of 228.8 billion yen ($2.9 billion) in July-September, close to three times its year-ago profit when it was still reeling from the Japan earthquake and tsunami and Thai floods that ruptured its supply chain.

This year has seen improved sales in the United States, Toyota's biggest market, and in Southeast Asia. Over the first nine months of the year, Toyota and its group companies sold 7.4 million vehicles, more than any other car maker.

Toyota is less likely to cut its full-year forecasts than Nissan Motor Co (7201.T: Quote), which reports quarterly results on Tuesday, or Honda Motor Co (7267.T: Quote), which slashed its forecasts last week- even though sales in China virtually halved in September and October amid often violent protests against Japanese goods in a row over islets in the East China Sea.

Due to accounting methods, the full impact of that may not be felt until the current and fourth quarters of Toyota's business year. Toyota has around a 7 percent market share in China, the world's biggest autos market, but is less exposed than rivals to that market. China accounted for about 12 percent of its global sales last year, some way below Nissan's 27 percent and Honda's 20 percent.

Some experts expect Toyota, which provides more conservative forecasts than others, to offset much of the China hit through solid performances elsewhere - in the United States, Asia and in the Middle East.

After a series of crises - from the global financial meltdown and damaging recalls to natural disasters and the China row - Toyota is again making money, but profitability in its core car business is much lower than its financial services unit, which brings in just 5 percent of revenue, but a quarter of operating profit.

Investors and executives want to see real signs that Toyota is fixing its core problem. As the company's president Akio Toyoda puts it: having to make "ever-better cars".   Continued...

Spanners are placed on a mat by mechanics for the photographer inside a Toyota service centre in Taipei in this March 3, 2010 file photo. REUTERS/Nicky Loh/Files