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Toyota's (TM) Q2 Operating Income Rises Y/Y, Revenues Top

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Toyota Motor Corporation’s (TM - Free Report) operating income rose 10% to ¥522 billion ($4.7 billion) in second-quarter fiscal 2018 (ended Sep 30, 2017). Also, the Japanese automaker reported net income of ¥481 billion ($4.3 billion) in the quarter, up 17.1% from the year-ago period.

Consolidated revenues increased 7% year over year to ¥7.14 trillion ($64.36 billion) in the quarter. The top line surpassed the Zacks Consensus Estimate of $63.74 billion.

In the first six months of fiscal 2018, consolidated vehicle sales went up to 4,389,435 units globally, an increase of 25,898 units compared with the same period last year.

Toyota Motor Corp Ltd Ord Price, Consensus and EPS Surprise

Segment Results

All figures mentioned below are U.S. GAAP-based.

The Automotive segment’s net revenues rose to ¥6.37 trillion ($57.4 billion) in the reported quarter in comparison to ¥5.9 trillion ($54.7 billion) in the year-ago quarter, while operating income increased to ¥423 billion ($3.8 billion) from the year-ago figure of ¥394 billion ($3.6 billion).

The Financial Services segment’s net revenues rose to ¥494 billion ($4.4 billion) in the reported quarter in comparison to ¥432 billion ($4 billion) in the year-ago quarter, while operating income increased to ¥69 billion ($621 million) from the year-ago figure of ¥62 billion ($573 million).

All Other businesses’ net segmental revenues rose to ¥431 billion ($3.9 billion) in the quarter under review compared with ¥284 billion ($2.6 billion) in the year-ago quarter, while operating income rose to ¥23 billion ($205 million) from the year-ago figure of ¥17 billion ($156 million).

Financial Position

Toyota had cash and cash equivalents of ¥2.8 trillion ($25 billion) as of Sep 30, 2017 compared with ¥3 trillion ($27.8 billion) as of Mar 31, 2017. Long-term debt amounted to ¥10.5 trillion ($95 billion) as of Sep 30, 2017 compared with ¥9.9 trillion ($91.67 billion) as of Mar 31, 2016.

In the first half of fiscal 2018, operating net cash flow was ¥2.1 trillion ($18.4 billion) compared with ¥1.6 trillion ($15 billion) registered in the year-ago period.

Fiscal 2018 Guidance

Toyota expects its consolidated vehicle sales guidance for fiscal 2018 to be within the range of 8.9-8.95 million units compared with the 8.97 million units recorded in fiscal 2017.

The company reiterated its expectation for consolidated net revenues to be ¥28.5 trillion ($56.8 billion), reflecting a 0.4% decline over fiscal 2017.

The operating income guidance is ¥2 trillion ($18 billion) compared with the previous guidance of ¥1.85 trillion ($16.82 billion) for 2018.

Dividend

Toyota announced that its board members have approved an interim dividend of ¥100 (90 cents) per common share.

Share Repurchase

The company announced that it will be buying back 45 million shares worth up to ¥250 billion ($2.25 billion).

Zacks Rank & Key Picks

Toyota carries a Zacks Rank #3 (Hold).

Some better-ranked companies in the auto space include Navistar International Corporation , Cummins Inc. (CMI - Free Report) and BorgWarner Inc. (BWA - Free Report) . Navistar and Cummins sport a Zacks Rank#1 (Strong Buy), whereas BorgWarner carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Navistar has an expected long-term growth rate of 5%.

Cummins has an expected long-term growth rate of 12.1%.

BorgWarner has an expected long-term growth rate of 9.1%.

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