TOKYO -- Toyota Motor Corp. squeaked out a profit in the latest quarter, just barely, despite plunging sales amid the COVID-19 pandemic, and expects to remain in the black for the full year.
Toyota’s relatively robust results come as virtually all major Japanese players -- Nissan, Honda, Subaru, Mazda and Mitsubishi -- slumped to quarterly operating losses in the April-June period.
Toyota bucked the trend, but operating profit nearly evaporated, plunging 98 per cent to 13.9 billion yen (C$174.9 million) in the automaker’s fiscal first quarter ended June 30.
In announcing the results on Thursday, Japan’s biggest auto manufacturer said net income tumbled 74 per cent to 158.8 billion yen (C$1.99 billion) in the period as revenue fell 40 per cent to 4.6 trillion yen (C$57.8 billion).
Over the previous two fiscal years, before the COVID-19 outbreak, Toyota’s quarterly operating profit consistently ranged between 500 billion yen to 700 billion yen (C$6.2 billion to C$8.8 billion).
Global retail sales slid 32 per cent to 1.85 million vehicles in the April-June period, including results from its Daihatsu small-car subsidiary and truck-making affiliate Hino. Worldwide wholesale volume dropped 50 per cent to 1.16 million vehicles.
Toyota’s slump comes as the COVID-19 pandemic hammers earnings throughout the industry.
Cost cutting combined with lower labour costs and curtailed R&D outlays at Toyota helped offset the blow of falling sales, as the worldwide slowdown forced factories and dealerships to suspend operations.
A faster-than-expected rebound in China also helped keep Toyota in the black. Operating profit in China actually surged in the April-June period as sales rose 14 per cent.
Toyota halted production at plants around the world in response to government regulations meant to limit transmission of the coronavirus. And even in areas with fewer restrictions, Toyota scaled back output in line with falling demand to forestall a huge pile up of inventory.
Toyota’s factories in China, the original epicenter of the global outbreak, resumed normal operation on March 30, but plants in other regions mostly started coming back online in May.
Toyota’s important North American operation booked a regional operating loss of 97.7 billion yen (C$1.2 billion) in the period, as regional wholesale volume slumped 62 per cent to 285,000 units.
In Europe, wholesale volume fell 50 per cent to 141,000 vehicles in the latest quarter. Europe also notched a quarterly regional operating loss, of 19.7 billion yen (C$247.9 million).
Looking ahead, Toyota said earnings forecasts are still subject to change due to lingering uncertainty over the pace of the pandemic recovery and threat of a second wave of outbreaks.
Therefore, Toyota predicted operating profit will fall 79 per cent to 500 billion yen (C$6.2 billion) in the current fiscal year ending March 31, 2021, while net income is expected to drop 64 per cent to 730 billion yen (C$9.1 billion). Revenue is seen down 20 per cent to 24 trillion yen (C$302 billion).
Global wholesale deliveries are forecast to fall 20 per cent to 7.2 million vehicles, with declines in virtually every major region.
North American volume is expected to slide 14 per cent to 2.33 million vehicles, while European wholesale is pegged to fall 16 per cent to 870,000 units.
Global retail sales are forecast to fall back 13 per cent to 9.1 million vehicles in the fiscal year through March 31, 2021, from 10.46 million vehicles in the previous year.