Toyota Motor Corporation
(NYSE:TMC) announced its Q1 earnings for fiscal 2013 which were
buoyed by strong performances in Japan and North
America. Although these results come on the back of a low
base, these were generally better than expected. Last year's
results were badly affected due to production and supply chain
disruptions caused by the tragic tsunami and earthquake.
Net revenues surged 60% to 5,501.5 billion yen in the first
quarter while the operating income jumped to 353 billion yen. Last
year's operating income stood at a negative 108 billion yen.
Net income for the quarter was 290.3 billion yen. The results
left the investors encouraged as the stock traded 5% higher after
As a result of this strong quarter, Toyota now expects to sell
9.76 million Toyota and Lexus vehicles in fiscal 2012, an increase
of 2.5% over the previous guidance. Profitability remained
stable as the gross profits (after excluding depreciation and
R&D expenses in the cost of products) stood at 21.9% for the
We currently have a
$93 price estimate for Toyota's stock
, but we are in the process of revising our price estimates to
incorporate Q1 earnings.
Higher Production Means Higher Sales
The automaker sold a total of 2.27 million vehicles in the
quarter, an increase of 85.8% over the previous year quarter. In
the first half of 2012, Toyota overtook General Motors (
) to regain its spot as the largest auto selling company in the
world. In North America, which is Toyota's biggest market, the
automaker sold a whopping 141% more cars this quarter than it did
in the previous year quarter. Sales were certainly helped by a two
and a half fold increase in production in the region.
In Europe too, the automaker was able to sell 20% more vehicles
than it did last year. But again, the high growth rates are because
of low base effect witnessed in the previous year quarter. It will
be interesting to watch out for Toyota's performance in the coming
months in the region once the effect of low base is discounted out.
Vehicle sales in Japan surged 97% during the quarter. Japan
accounts for over 40% of Toyota's global production and the
automaker exports nearly half of its vehicles produced in Japan to
international markets. The strong Yen could dent the automaker's
profitability in case the currency continues to remain strong.
Toyota has assumed a conversion rate of 1 USD to 80 yen while
forecasting its fiscal 2013 guidance.
Big Plans For Asia/Emerging Markets
Toyota is also gearing up for a greater presence in Asia and
other emerging economies. It is in the process of developing
eight new compact models
aimed specifically for the markets of China, Brazil, Indonesia,
India and other developing markets. By 2015, the automaker hopes to
achieve half of its sales from developing markets, up from 45%
currently. For the fiscal 2013, the management expects the capital
expenditure in Asia to surge 25%. The company-wide capital
expenditure is expected to jump more than 15% over the previous
How a Company's Products Impact its Stock Price at