TOKYO (Reuters) - Toyota Motor Corp (7203.T) raised its full-year operating profit forecast by 9.1 percent on Wednesday as a sharp decline in the yen increases the value of repatriated earnings and makes up for lower vehicle sales.
The world’s biggest automaker now expects operating profit of 2.50 trillion yen ($21.87 billion) for the business year ending March 31, rather than the previously forecast 2.30 trillion yen, thanks partly to a 135 billion yen contribution from foreign exchange gains. It sees sales at 9.05 million vehicles instead of 9.10 million.
Toyota also revised its net profit estimate to 2.00 trillion yen from 1.78 trillion yen. Net profit includes earnings made with joint venture partners in China.
“Of course exchange rates helped, but we also made efforts to offset negatives such as a rise in fixed costs, with cost-cutting and sales efforts,” Executive Vice President Nobuyori Kodaira told a news conference.
The Japanese currency passed 113 yen to the dollar this week for the first time since December 2007 after Japan’s central bank eased its already-loose monetary policy. Toyota adjusted its dollar rate assumption for the full year to 104 yen from 101 yen, leaving more room for profit growth is the yen stays weak.
In July-September, an 8 percent fall in the yen combined with cost-cutting to help Toyota book record second-quarter earnings.
Toyota reported an 11.3 percent rise in second-quarter operating profit to 659.22 billion yen, compared with the 650.7 billion yen average estimate of 13 analysts polled by Thomson Reuters I/B/E/S. Net profit rose 23 percent to 539.06 billion yen.
The automaker has been enjoying strong sales in the United States, its biggest market, spurred by economic recovery, easy access to financing and lower gasoline prices. It raised its sales forecast for North America slightly, to 2.74 million vehicles from 2.71 million.
Toyota aims to boost China sales by at least a fifth to over 1.1 million vehicles this year. Unlike Honda and Nissan, Toyota and joint venture partners China FAW Group Corp [SASACJ.UL] and Guangzhou Automobile Group Co Ltd (601238.SS) (2238.HK) have seen sales gain over the past few months.
Shares in Toyota ended up 0.1 percent ahead of the earnings announcement, compared with a 0.4 percent rise in Tokyo’s benchmark Nikkei average .N225.
(This version of the story was refiled to remove extra word “against” in first paragraph)
Reporting by Mari Saito; Editing by Christopher Cushing