Toyota Motor Corporation reported a lower full-fiscal year forecast as the strength of the yen challenged the automobile industry in Japan.
The Japanese automotive company expected the operating profit to decline 44 percent or 1.6 trillion yen, lower than the initial forecast of 1.7 trillion yen. After the surge of the yen and the damaged brought by the successive earthquakes in Kumamoto, the automaker perceived the slide of profit.
Managing Officer Tetsuya Otake admitted that the cost cutting was not able to remove the negative impression brought by strong yen. The cost cuts added approximately 90 billion yen in the operating income of Tesla. The appreciation of the currency took 235 billon of the company’s operating profit.
Earlier today, Toyota confirmed that net income from April to June declined 15 percent to 525 billion yen, significantly lower than the 649.3 billion yen in the same quarter in 2015. However, the company still surpassed the 435 billion yen projected by the analysts.
For the fiscal year through March 2017, the company expects a profit decline to 1.45 trillion yen lower than the 1.5 trillion yen profit announced previously. Toyota anticipates 10.15 million vehicles to be sold for the same period.
Toyota on Yen’s Appreciation
The soaring yen made it hard for the automobile companies to export their units and has cut the value of repatriated earnings. In the United States, the sales of Toyota and Lexus dropped this year while the Volkswagen AG managed to take a step forward in the downtrend of the Japanese competitor.
Considered as the world’s largest auto market, Toyota managed to sell 689,000 vehicles in China. Managing officer Tetsuya Otake explained that the company perceives a tight competition in the market, however, it won’t force demand just by increasing the incentives.
Toyota only sold 2.17 million vehicles in the same quarter globally with sales up in Asia and Europe but down in North America. From January to March, Prius hybrid, Lexus luxury line and Corolla subcompact made 2.3 trillion yen.
Auto analyst Steve Man said ‘They are trying to cut costs, variable costs, overhead cost but there’s not enough to offset the loss from the yen. They are the most aggressive in terms of cutting the forecast. They are trying to cut as much as possible to set a lower expectation.”
Toyota Stock Performance
Shares of Toyota Motors changed 1.83 percent higher to 5,691.00 yen after opening at 5,591.00 yen. The Japanese automotive company has a market capitalization of 19.00 trillion yen and a dividend yield of 3.69 percent. It has a price earnings ratio of 7.75 with a 52-week high of -177-.72 percent an a 52-week low of 12.22 percent.
Toyota has a 200-day moving average of -1.32 percent and a 20-day SMA of 4.59 percent. Its volatility for the week stands at 1.39 percent and for the month is 0.89 percent with a target price of 112.07. Currently, the stock has gross margin of 24.50 percent, profit margin of 8.10 percent and an operating margin of 10.00 percent.
The Tokyo based company has a payout ratio of 8.50 percent and a total shares outstanding around 1662.82. Tesla’s returns on investment stands at 5.60 person and a return on equity of 13.50 percent.
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