After the Shakespearian drama last Friday night at Nissan, where an upper management house-cleaning detracted from so-so numbers, today’s earnings conference at Toyota was the proper counter-piece: Utterly boring good news. The only place where it will stir emotions is in Detroit, where the UAW and the corporate defenders of the chicken tax will scream that a lower yen makes Toyota rich. Which it did.
Toyota’s affable EVP Nobuyori Kodaira, flanked by a 2nd-tier bean counter, Takuo Sasaki, declared that the last quarter was Toyota’s best ever in terms of operating profits, and that his company expects a net profit of 1.67 trillion yen (approximately $17 billion) when the current fiscal ends on March 31, 2014.
This expectation is based on a FOREX rate of 97 yen to the dollar, and 130 yen to the Euro. Today, the rates stood at 98.6 yen to the greenback and 133.2 yen to the Euro. Should the yen get cheaper than budgeted, the profits will be higher – in yen, at least
The 1.67 trillion yen would be “just short of the record net profit of 1.72 trillion yen Toyota booked in the year ended in March 2008,” wrote Yoko Kubota of Reuters, who keeps track of these things.
Effects of FOREX changes lifted Toyota’s net income by 540 billion yen ($5.5 billion) in the first half of the fiscal. The still penny-pinching company generated another $1.8 billion through cost reduction and increased marketing. Toyota enacted drastic savings measures after what is called “the Lehman shock” in Japan. Rigorous belt-tightening helped Toyota ride out carmageddon, tsunami, Thai floods, Chinese island riots, and a murderously strong yen. With business up in the U.S. , and with the yen finally retreating from its unsustainable highs, while the savings programs are still in place, high profits are unavoidable.
Toyota still plans to have produced and sold 10.1 million units worldwide by the end of the current fiscal.
No reasons for complaints all around, except when you are a journalist looking for drama and intrigue. In that case, Nissan last week was the better venue. Oh, the UAW, and so Detroit carmakers undoubtedly will scream “currency manipulation.” Which is as much baloney as the allegedly closed market Japan. In the world of the UAW, of Michigan senators and their Detroit prayer leaders, the dollar is rock steady, it’s always the other currencies that change.