Updated version 3 - Toyota profits surge and annual forecast raised, hybrid vehicle sales strong

The full article includes quotes from the Chief Financial Officer, charts, and details on shareholder returns

Daniel Leussink

Reuters Tokyo, November 5 - Toyota 7203.T on Thursday reported its first profit growth in six quarters and raised its annual earnings forecast by 15%, thanks to robust demand for high-margin hybrid vehicles and a weaker yen, offsetting declines in sales in China and the Middle East.

This performance, along with a plan to return up to $89 billion to shareholders over the next five years, sent Toyota shares sharply higher on the Tokyo stock market.

Despite formidable headwinds such as competition from Chinese electric vehicle makers and a spike in fuel prices following the Iran war, the world’s largest automaker benefited from its focus on gasoline-electric hybrid models.

Toyota said that after posting a better-than-expected 34% profit increase in the July to September quarter, it now expects operating profit for the fiscal year ending in March to reach 3.9 trillion yen ($24.6 billion).

Unlike other legacy automakers—which went all-in on electric vehicles only to have to write down billions of dollars in investments when EV demand faltered—Toyota has concentrated on advancing its hybrid technology, which it pioneered decades ago with the Prius.

This strategy has been key to Toyota defending its market share in its primary market, the United States, even as fast-growing Chinese EV makers threaten elsewhere.

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Toyota raised its planned share buyback program from a maximum of 1 trillion yen to 1.3 trillion yen, and said it would spend up to 14 trillion yen ($89 billion) to return funds to shareholders by March 2031.

Following the US midterm elections, investors sold AI-related stocks and bought blue-chip shares; Toyota stock had already risen about 8% ahead of the earnings release. Subsequently, the gains expanded further, with the shares closing up more than 16%, marking the biggest single-day jump since 1987.

Toyota’s Chief Financial Officer, Yoichi Miyazaki, said at a briefing that while surging fuel prices are hurting consumer confidence in the highly competitive Chinese market, Toyota is actively responding.

“We have successfully halted the loss of market share and are now beginning to recover some ground,” he said.

Whether in production, design, or software and robotics technology, China is increasingly leading the global auto industry. Toyota also said it will establish its own robotics business to provide robots for manufacturers and other industries, and position this as a pillar for future growth.

Operating profit for the July to September quarter came to 1.13 trillion yen, above the median forecast of 992 billion yen in a London Stock Exchange Group (LSEG) survey of nine analysts.

Toyota’s Chief Accounting Officer, Takanori Azuma, said the company is offsetting the impact of conditions in the Middle East and surging raw material prices through sales efforts and cost reductions.

(1 US dollar = 157.8400 yen)

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