Toyota's 3rd Quarter Net Income Jumps 34% to New Record

Includes: HMC, NSANY, TM
by: Steven Towns

Toyota (TM) reported 3rd quarter financial results after the Tokyo Stock Exchange closed today. Senior Managing Director Takeshi Suzuki is quoted in a Toyota press release saying, "Compared with the first and second quarters, operating income strongly improved in the third quarter, exceeding the results of the same period last year. Sales growth, particularly in Asia and North America, along with cost reduction efforts and currency fluctuations contributed to the increase." Toyota reported weak demand in Japan with the exception of the mini-vehicle segment. The weak demand applies to rivals Honda (HMC) and Nissan (NSANY) as well while the real growth opportunities in Japan lie in the mini-vehicle and luxury segments, which I believe Toyota is the best positioned of Japan's Big-3 since it was first to introduce its luxury Lexus brand domestically (last summer) and also owns a majority stake in mini-car maker Daihatsu. Q3 financials and links to materials below.

Toyota's 3rd Quarter (period ended Dec. 31, 2005) Financial Results with YOY Change in %

    • Vehicle Sales: 1.98 million units (+7.6%)
    • Net Revenue: 5,333.3 billion yen, US$45.58b (+14.8%)
    • Operating Income: 482.2 billion yen, US$4.12b (+14.0%)
    • Income Before Taxes, Minority Interest and Equity in Earnings of Affiliated Co.'s: 639.9 billion yen, US$5.47b (+43.1%)
    • Net Income: 397.5 billion yen, US$3.4b (+34.1%)

Toyota reported that Operating Income increased overall by 59.3 billion yen (US$506.8m) in the quarter, credited to a positive FOREX impact of 130 billion yen (US$1.1b), marketing efforts (60 billion yen, US$513m) and cost reduction efforts (30 billion yen, US$256m). A decrease in pension related gains transfers with the government resulted in a 28.5 billion yen (US$244m) decrease along with a 132.2 billion yen (US$1.13b) increase in expenses.

Capital investment totaled 365 billion yen (US$3.12b) and depreciation expenses were 236.2 billion yen (US$2.02b).

Toyota also reported a Y117/US$1 exchange rate for the quarter.

Regarding full fiscal year outlook, Suzuki stated, "Prospects for our unconsolidated financial results have not changed since our interim report," he said. "We aim to exceed last year's totals for consolidated revenue and earnings."

Link to Toyota Q3 financial results press release.

Link to Toyota Q3 earnings release presentation (PDF).

TM 1-yr chart: