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Toyota (TM) Q2 Earnings Beat, Revenues Lag Estimates

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Toyota Motor Corporation (TM - Free Report) recorded earnings of ¥128.54 per share ($2.51 per ADR) in second-quarter (ended Sep 30, 2016) fiscal 2017, down from ¥192.51 per share ($3.16 per ADR) earned in second-quarter (ended Sep 30, 2015) fiscal 2016.

Earnings per ADR surpassed the Zacks Consensus Estimate of $2.12. The Japanese automaker reported consolidated net income of ¥393.71 billion ($3.86 billion) in second-quarter fiscal 2017, down from ¥611.72 billion ($5.01 billion) posted in the year-ago quarter.

Consolidated revenues decreased 8.6% year over year to ¥6.48 trillion ($63.32 billion) in the reported quarter. The figure also missed the Zacks Consensus Estimate of $64.56 billion.

Unit sales went up 1.4% year over year to 2.19 million vehicles globally. Sales improved 10.3% to 567,640 units in Japan, 5.3% to 211,673 vehicles in Europe and 17.1% to 380,579 units in Asia. Sales inched up 0.1% to 684,985 vehicles in North America but declined 21.3% to 346,001 units in other regions (Central and South America, Oceania, Africa and the Middle East).

Operating income plunged 42.6% to ¥474.6 billion ($4.65 billion) from ¥827.4 billion ($6.78 billion) a year ago. The decline was due to unfavorable foreign exchange rates and increase in expenses, partially offset by cost-reduction efforts and higher sales volumes.

Segment Results

The Automotive segment’s revenues fell 8.7% to ¥5.9 trillion ($57.8 billion) in the reported quarter, while the operating income plunged 44.8% to ¥393.9 billion ($3.23 billion).

The Financial Services segment’s revenues declined 9.9% to ¥432.1 billion ($4.24 billion), while the operating income decreased 35.2% to ¥62 billion ($508.2 million).

All Other businesses’ revenues dropped 3.7% to ¥283.8 billion ($2.78 billion) in the quarter. Operating income increased 12.7% to ¥16.9 billion ($138.5 million).

Financial Position

Toyota had cash and cash equivalents of ¥2.77 trillion ($27.2 billion) as of Sep 30, 2016, compared with ¥2.93 trillion ($25.6 billion) as of Mar 31, 2016. Long-term debt amounted to ¥12.26 trillion ($120.2 billion) as of Sep 30, 2016 compared with ¥13.59 trillion ($113.25 billion) as of Mar 31, 2016.

In the first half of fiscal 2017, operating net cash flow was ¥1.57 trillion ($15 billion) compared with ¥1.96 trillion ($16.1 billion) recorded in the year-ago period. The company declared a quarterly cash dividend of ¥100 (98 cents) per share in the quarter.

FY17 Guidance

Toyota reiterated its consolidated revenue guidance of ¥26 trillion ($252.4 billion) for fiscal 2017. The revenue guidance reflects an 8.5% decline over fiscal 2016.

Operating income guidance has been raised to ¥1.7 trillion ($16.5 billion) from the previous forecast of ¥1.6 trillion ($15.7 billion). The revised guidance implies a 40.4% year-over-year decrease.

Net earnings are expected to be around ¥1.55 trillion ($15 billion), up from the prior view of ¥1.45 trillion ($14.2 billion). The net income guidance reflects expectations of a 33% decrease over fiscal 2016.

TOYOTA MOTOR CP Price, Consensus and EPS Surprise


TOYOTA MOTOR CP Price, Consensus and EPS Surprise | TOYOTA MOTOR CP Quote

Zacks Rank

Currently, Toyota carries a Zacks Rank #4 (Sell).

Some better-ranked automobile stocks include Standard Motor Products Inc. (SMP - Free Report) , Visteon Corp. (VC - Free Report) and Gentex Corp. (GNTX - Free Report) .

Standard Motor, with a long-term expected growth rate of 15%, sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Visteon, a Zacks Rank #2 stock, has a long-term growth rate of 23.60%.

Gentex, with a Zacks Rank #2, has a long-term growth rate of 11.17%.

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