Toyota Motor Corp. surprised analysts by turning a small profit for the quarter, albeit the company’s smallest profit in nearly a decade, overcoming poor sales globally due to the impact of the coronavirus pandemic.
The company reported an operating profit of 13.9 billion yen, or $131.73 million, for the most recent quarter — a drop of 98 percent. However, that exceeded analysts’ estimate for a loss of 179 billion yen, or $1.69 billion.
The result gives credence to the company’s earlier assertion that it would be profitable in fiscal year 2021 despite the current economic conditions. Thus far, Toyota has fared better than many of its rivals during the pandemic. Home market competitors Nissan and Honda reported Q1 losses. Most of its global adversaries are expecting to post full-year losses.
Toyota reiterated its annual operating profit forecast of 500 billion yen, its weakest in nine years, based on its current sales recovery pace.
“The pace of recovery in a number of regions has been faster than we had initially forecast,” a Toyota spokesman said. “But the virus situation continues to place many uncertainties on the business outlook … and we see a possibility that our forecast could change.”
The automaker said it expects global sales of 9.1 million cars this year, also its lowest in nine years; however, it’s just a 13% slide from 2019 when it moved 10.46 million vehicles. It’s also an upgrade to the company’s previous prediction of a 15% drop.
While better than most companies are expecting, Toyota officials noted that the North American market will be where the company experiences its biggest hit, projecting a 14% drop in sales. The company noted North American sales fell 62% in first quarter, leading to the 50% slump in consolidated global sales to 1.16 million units.
As North America has been a struggle, not so surprisingly given results posted by other maker, Toyota’s China sales have done well. The company was the first hit by the pandemic, thus the first to emerge and the government has been providing incentives to encourage new vehicle sales.
The automaker’s luxury unit, Lexus, has also outperformed the market during the first half of the year with sales rising 7 percent. Toyota expects global sales to gradually improve through December, returning to normal in January-March 2021 to be up 5% on the year, Reuters reported.