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Toyota Q1 Earnings Beat on Cost Control and Currency Impact

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Toyota Motor Corp. (TM - Free Report) recorded earnings of ¥185.34 per share ($3.64 per ADR) in first-quarter fiscal 2015 (ending Jun 30, 2014), beating ¥177.32 per share ($3.58 per ADR) in first-quarter fiscal 2014 (ending Jun 30, 2013). Earnings per ADR surpassed the Zacks Consensus Estimate of $3.07. The Japanese automaker posted consolidated net income of ¥587.8 billion ($5.76 billion) for first-quarter fiscal 2015, improving from ¥562.2 billion ($5.68 billion) in the year-ago quarter.

Consolidated revenues in the quarter increased 2.2% year over year to ¥6.39 trillion ($62.65 billion). Revenues missed the Zacks Consensus Estimate of $62.87 billion.

Unit sales inched up 0.4% to 2.24 million units. Unit sales rose 3.2% to 710,409 units in North America, 7.8% to 207,481 units in Europe and 0.5% to 432,192 units in other regions (Central and South America, Oceania, Africa and the Middle East). However, sales declined 3.8% to 505,827 units in Japan and 2.4% to 385,376 units in Asia.

Operating income increased to ¥692.7 billion ($6.79 billion) from ¥663.4 billion ($6.70 billion) a year ago. The increase in operating income was mainly due to the favorable impact of a weaker yen and cost containment strategies.

Segment Results

The Automotive segment’s revenues rose 1.7% to ¥5.91 trillion ($57.99 billion) in the quarter while its operating income declined 3.6% to ¥586.7 billion ($5.75 billion).

The Financial Services segment’s revenues moved up 11% to ¥377.4 billion ($3.7 billion), while the operating income improved 91.6% to ¥98.2 billion ($962.7 million).

All Other businesses' revenues rose 10.2% to ¥258.3 billion ($2.53 billion) and operating income increased 51.4% to ¥10.7 billion ($104.9 million).

Financial Position

Toyota had cash and cash equivalents of ¥2.18 trillion ($21.4 billion) as of Jun 30, 2014, compared with ¥2.04 trillion ($20.4 billion) as of Mar 31, 2014. Total debt amounted to ¥16.49 trillion ($161.7 billion) as of Jun 30, 2014 against ¥16.33 trillion ($163.3 billion) as of Mar 31, 2014.

In the first quarter of fiscal 2015, operating net cash flow fell to ¥875.6 billion ($8.6 billion) from ¥1.03 trillion ($10.4 billion) recorded in the year-ago period.

Fiscal 2015 Guidance

Toyota’s consolidated revenues are estimated to be ¥25.7 trillion ($254.5 billion), in line with fiscal 2014. Operating income is expected to rise 0.3% year over year to ¥2.3 trillion ($22.8 billion). Net earnings are expected to fall 2.4% to ¥1.78 trillion ($17.6 billion) or ¥$561.54 per share ($11.12 per ADR).

Consolidated vehicle sales for fiscal 2015 are expected to be about 9.10 million units, down from 9.12 million in fiscal 2014.

Currently, Toyota carries a Zacks Rank #2 (Buy). Investors interested in the same industry could also consider stocks like Nissan Motor Co. Ltd. (NSANY - Free Report) , Tower International, Inc. (TOWR - Free Report) and Magna International Inc. (MGA - Free Report) . All these stocks sport a Zacks Rank #1 (Strong Buy).

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