Toyota turns a $1.2 billion profit
The profit came despite huge spending on recalls and other problems. The company sees growth in 2010. But to help US sales, expect incentives into the fall.
Updated: 1:35 p.m. ET.
Here's how strong Toyota Motor (TM) is. It reported $1.2 billion in fiscal-fourth-quarter profit, despite spending $1.1 billion recalling some 8 million vehicles around the world and losing $223 million in the key North American market.
And it boosted its guidance for the coming fiscal year.
Despite the recall’s cost and lost sales, Toyota expects its next full-year profit to rise 48% to $3.3 billion.
Toyota's American Depositary Units in New York were up 1.6% to $77.97 this afternoon. They had fallen 22% between Jan. 19 and Feb. 23 and are still down 7.3% on the year.
Rival Ford Motor (F) was up 2.8% to $12.48. Honda Motor (HMC) was down 0.4% to $33 in New York.
The company's $1.2 billion profit for the quarter ending in March reversed an $8 billion loss in the same quarter of 2009, when the global auto market was bottoming out. Revenue rose 49% to $58 billion. It was slowed, the Detroit Free Press noted, only slightly by a stronger Japanese yen that makes foreign sales less profitable.
But in North America, once the company’s strongest market, Toyota booked an operating loss of $233 million for the quarter. That was actually good news. A year ago, it lost $1.9 billion as the auto industry was getting creamed by the worst of the recession.
In addition to spending $1.1 billion on recalls and quality improvements, the furor had cost the company roughly $800 million in lost sales worldwide.
For the entire fiscal 2010, Toyota said it earned $2.3 billion, reversing the $5.5 billion loss for fiscal 2009 that was the worst for the automaker since it was founded in 1937. Much of the turnaround came from cost-cutting and Toyota’s financial arm, as total revenues were down 8%.
CEO Akio Toyoda vowed to press forward with new technologies and expansion in China.
Toyota has boosted its rebates and interest-free loan offers to U.S. consumers in an attempt to win back customers, breaking with years of maintaining that incentives cheapened the brand.
While incentives may be halted by year-end, Takahiko Ijichi, a Toyota senior managing director, suggested the offers would continue through the summer.
“We do not plan to keep incentives at this level,” he said through a translator.
Toyota also said it had booked a special cost for its entire fiscal year of about $550 million for the shutdown of the NUMMI plant in California, the former joint venture with General Motors and the only Toyota plant represented by the United Auto Workers. Toyota’s North American production was about half its sales in the quarter.
The results came a day after U.S. auto safety regulators opened a fresh probe into Toyota’s handling of a 2005 recall over faulty steering rods in older pickups, questioning whether the automaker delayed making the fix after issuing recalls in Japan.
Last month, Toyota agreed to a $16.4 million fine by the National Highway Traffic Safety Administration for delaying by at least four months the recall of 2.3 million vehicles to fix sticking accelerator pedals. Toyota paid the fine but denied NHTSA’s conclusions that it had dragged its feet or broken U.S. laws.
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