Toyota Earnings Up More than Threefold

Toyota Motor Corp. ( TM - Analyst Report ) posted earnings of ¥962.16 billion ($10.22 billion) or ¥303.78 ($3.23) per share in the fiscal year ended Mar 31, 2013, reflecting more than threefold increase from ¥283.56 billion or ¥90.20 per share in the prior fiscal year. However, earnings missed the Zacks Consensus Estimate of $6.26 per share for the year.

Consolidated revenues in the year escalated 18.7% to ¥22.06 trillion ($234.33 billion) on a 20.7% rise in unit sales to 8.87 million units. Unit sales rose 10.0% in Japan, 31.9% in Europe, 0.1% in Europe, 26.9% in Asia and 27.8% in Other reporting regions.

However, revenues were lower than the Zacks Consensus Estimate of $278.12 billion. Operating income increased nearly fourfold to ¥1.32 trillion ($14.03 billion) from ¥355.63 billion in fiscal 2012.

The improvement in revenues and profits was attributable to positive impacts from marketing activities of ¥650.0 billion ($6.90 billion), cost reduction activities of ¥450.0 billion ($4.78 billion) and currency fluctuations of ¥150.0 billion ($1.59 billion), partially offset by negative impact from related expenses of ¥300.0 billion ($3.19 billion).

Segment Results

In the Automotive segment, revenues went up 20.2% to ¥20.42 trillion ($216.43 billion) in the year while operating income increased significantly to ¥944.70 billion ($10.13 billion) from ¥21.68 billion a year ago. The increase in operating income was mainly attributable to increases in production volume and vehicle unit sales as well as positive impact of cost reduction measures.

In the Financial Services segment, revenues scaled up 6.4% to ¥1.17 trillion ($12.43 billion) while operating income rose 3.1% to ¥315.82 billion ($3.35 billion). The improvement in operating income was caused by higher financing volume.

In All Other businesses, revenues grew 1.7% to ¥1.07 trillion ($11.33 billion) while operating income grew 27.5% to ¥53.62 billion ($569.41 million).

Financial Position

Toyota had cash and cash equivalents of ¥1.72 trillion ($18.25 billion) as of Mar 31, 2013, an increase from ¥1.68 trillion as of Mar 31, 2012. Total debt increased to ¥14.13 trillion ($150.08 billion) as of Mar 31, 2013, reflecting a debt-to-capitalization ratio of 53.8%, compared with ¥12.00 trillion or 53.2% as of Mar 31, 2012.

In fiscal 2013, Toyota’s operating net cash flow improved 68.8% to ¥2.45 trillion ($26.03 billion) from ¥1.45 trillion in the prior fiscal year, primarily driven by higher profits and significant rise in deferred income taxes. Meanwhile, capital expenditures (net) increased 18.7% to ¥815.37 billion ($8.66 billion) from ¥686.90 billion a year ago.

Fiscal 2014 Guidance

For fiscal 2014 ending Mar 31, 2014, Toyota projected consolidated vehicles sales to increase 229,000 units to 9.1 million units due to increase in vehicle sales outside Japan. Consequently, the company expects consolidated revenues to increase 6.5% to ¥23.5 trillion, operating income to rise 36.3% to ¥1.80 trillion yen and net earnings to go up 42.4% to ¥1.37 trillion for the fiscal year compared with fiscal 2013.

Our Take

Toyota manufactures and sells passenger cars, minivans, and commercial vehicles and related parts primarily in Japan, North America, Europe, and Asia. Last year, the automaker recaptured the sales crown from General Motors Company ( GM - Analyst Report ) by selling 9.75 million vehicles globally in 2012, which exceeded GM’s sales of 9.29 million vehicles.

Currently, it retains a Zacks Rank #3 (Hold). Other prominent global automakers in Japan include Honda Motor Co. ( HMC - Analyst Report ) and Nissan Motor Co. ( NSANY ) .

(Exchange rate (Mar 31, 2013): $1 = ¥94.16)