Toyota profit up 70% despite sales slide

Toyota's quarterly profit shot 70 per cent helped by a weaker Japanese yen cost cutting which more than offset a slight decline in vehicle sales.

Toyota Motor Corp said today its July-September net profit was up at ¥438.4 billion from ¥257.9 billion a year earlier.

The Tokyo-based maker of the Prius and Camry raised its earnings forecast for the fiscal year ending March 2014 to ¥1.67 trillion keeping its sales forecast at 9.1 million vehicles, on anticipated higher than expected sales in Japan, North America and Europe that would counter declining sales in Asia.

The company increased its plans for capital spending by ¥20 billion to ¥940 billion.

Quarterly sales slid to 2.24 million vehicles as against 2.25 million vehicles a year earlier.

The company last month said its global sales of the first nine months of the year totaled 7.41 million vehicles, little changed from the previous year but outpacing General Motors to keep its lead as the world's top-selling automaker.

Toyota took the global sales top honours from GM for the first time in 2008 but the US company retook the crown in 2011, when Toyota's plants were slowed by an earthquake and tsunami in northeastern Japan that damaged suppliers of parts.

The Japanese company however recovered the lead last year.

"In addition to the impact of the weaker yen, operating income increased due to our efforts with our suppliers and distributors for profit improvement through cost reduction and marketing activities, such as enhancement of the model mix," Toyota's executive vice president said Nobuyori Kodaira, said in a statement.

Japanese car makers, including Toyota, rely heavily on sales in foreign markets. As a result, any fluctuation in the currency markets has an impact on their profitability.

Over the past year Japanese car makers have benefited thanks to the decline in the value of the yen as it made Japanese cars more affordable for foreign buyers. The lower yen also boosted their profits while repatriating their foreign earnings back home.

The Japanese currency had fallen nearly 25 per cent against the US dollar since November last year after the new government unveiled a series of aggressive measures to spur Japan's flagging economy.

According to Toyota, the fluctuation on the currency resulted in an increase of ¥540 billion in its operating profit during the April-to-September period.