Toyota's 1st Sales Gain in 15 Months

Toyota Motor (TM - Analyst Report) has posted its first year-over-year monthly sales gain across the globe in 15 months during October. The company’s sales rose 4% to more than 630,000 vehicles. In the U.S., the company’s sales fell 3.5%. 

However, in the domestic market Toyota’s sales grew 15% helped by tax breaks for purchases of environment-friendly cars. In China, the company saw a staggering rise of 40% in sales. Toyota returned to profitability in the second quarter of fiscal 2010 ended Sep 30, 2009, after reporting losses since the third quarter of fiscal 2009. 

The company posted a profit of ¥21.8 billion ($232 million) or ¥6.96 per share (7 cents) per share. This profit was attributed to government incentive programs across the world – such as the U.S. “Cash for Clunkers”– that helped the company recoup its market share. Consolidated revenue in the quarter dipped 24% to ¥4.54 trillion ($48 billion). 

Automotive revenue fell 24% to ¥4.11 trillion ($44 billion) while Financial Services revenue shrank 17% to ¥307 billion ($4 billion). This was on the back of a decline in vehicle sales in each region as well as a negative impact from the appreciation of yen. Sales volume declined 16% to 1.64 million units due to a decrease in volume in all the regions except North America. 

In North America , volume increased by 13,938 units to 250,704 units driven by demand generated by the Clunkers program. Toyota revised its consolidated vehicle sales for the fiscal ending Mar 31, 2010, from 6.6 million to 7.03 million units, an increase of 430,000 units. 

This figure reflects the increase in sales due to the success of various incentive programs launched by governments across the world to stimulate demand in the industry as well as sales of the company’s own hybrids and other environment-friendly vehicles. Consequently, consolidated net revenues forecast were upgraded to ¥18 trillion ($191 billion). 

However, the company anticipates an operating loss of ¥350 billion ($3.72 billion) and net loss of ¥200 billion ($2.13 billion) for fiscal 2010. These lead us to recommend the shares of the company as Neutral.

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