Article: Toyota Profits Jump

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Source: http://www.thestar.com/NASApp/cs/Con...acodalogin=yes

TOKYO (AP) — Toyota Motor Corp. reported a slight dip in earnings in the second fiscal quarter but marked a record profit for the first fiscal half Monday as sales growth in North America, Europe and Japan offset losses from an unfavourable exchange rate.

Group profit at Japan's top automaker for the July-September quarter totaled 297.4 billion yen ($2.8 billion US), down one per cent from 301.9 billion yen a year ago, Toyota said.

Sales surged nearly 10 per cent to 4.5 trillion yen ($42.5 billion) for the quarter from 4.1 trillion yen.

For the six months ended Sept. 30, Toyota recorded group net profit of 584 billion yen ($5.5 billion), up 11.4 per cent from 524.5 billion yen a year ago. Sales climbed 9.7 per cent to nine trillion yen ($85 billion) from 8.2 trillion yen.

But Toyota chairman Hiroshi Okuda said the company must guard against complacency about its record earnings.

"When there is such quick growth in profit and sales, there is an arrogant tendency inside the company to take success for granted," he told reporters and analysts at a Tokyo hotel.

But he said Toyota is determined to boost growth around the world, including by adding another production plant in North America in the next few years. He did not give details.

Toyota now has four car-assembly facilities operating in North America, and a new plant in Texas is set to begin operation in 2006. Toyota also has a car plant in Mexico scheduled to begin production in December.

Toyota is targeting 8.5 million annual vehicle sales, including its Japanese small-car and truck affiliates, by 2006, Okuda said.

During the April-September period, Toyota sold 3.56 million vehicles around the world, up by 397,000, or 12 per cent, from a year ago.

The performance was solid enough to counter the negative effects of a strong yen, which pushes down the value of overseas earnings for Japanese exporters like Toyota. The U.S. dollar cost about 110 yen for the first half, compared to about 118 yen a year ago.

The unfavourable exchange rate cost Toyota — based in Toyoda city, central Japan — 120 billion yen ($1.1 billion) during the six-month period, while cost-cutting efforts added 330 billion yen ($3.1 billion) to its income.

At a time when rivals are struggling to boost sales at home, Toyota sold more cars during the first half in all key regions, including Japan, North America and Europe. Toyota also increased car sales in other Asian locations and Africa.

Toyota said it expects to sell 7.22 million vehicles for the fiscal year ending March 31, 2005, up 510,000 vehicles from the previous year. Toyota does not give consolidated net income or sales forecasts.

Toyota said its U.S. market share reached 12.1 per cent, a record high for the automaker. The Prius hybrid, Lexus RX330 luxury car, and Scion models that target younger buyers were strong sellers in the United States, according to Toyota.

Okuda said Toyota was on track to reach its North American sales target of 2 million vehicles this year.

In Europe, the Corolla and Yaris sedans continued to do well, while the Lexus RX330 and RAV4 sport-utility vehicle also added to sales. First half sales in North America increased 12 per cent to 1.12 million vehicles, and sales in Europe edged up 8 per cent to 476,000 vehicles.

Even in Japan, where others are struggling, Toyota sold two per cent more cars at 1.1 million vehicles.

For the last several years, Toyota has maintained a solid market share in Japan of more than 40 per cent and is hoping to reach 45 per cent, Okuda said.

Among plans to boost sales in Japan, Toyota will introduce the Lexus luxury brand next year and has started to revamp its existing dealer network to appeal to youngsters and women.

"Our ongoing efforts to introduce products that meet individual customer needs, as well as the optimization of our production organization worldwide, allowed us to grow and improve efficiency in the first half," Toyota executive vice-president Ryuji Araki said.