The COVID-19 pandemic impacted on the automotive industry on a global scale, and Toyota is no exception. Despite issues arising from it, the company’s full-year profits beat analysts expectations.
Additionally, Toyota officials revealed a $2.3 billion share buyback culminating in a 5-for-1 stock split this September. It’s also targeting to convert 80% of its product portfolio, about 8 million vehicles, will be electric by 2030.
The Japanese auto manufacturer issued its financial report for its 2021 fiscal year revealing its profits rose 10% to 2.25 trillion yen ($20.6 billion) from 2.04 trillion yen the previous year. These figures are based on sales that decreased nearly 9% to 27 trillion yen ($248 billion). Overall, Toyota reported an 8.9% decrease in sales revenues and an 8.4% drop in operating income.
Toyota’s “revenues for the automotive operations decreased by 2,148.1 billion yen, or 8.0%, to 24,651.5 billion yen in FY2021 compared with FY2020, and operating income decreased by 405.9 billion yen, or 20.2%, to 1,607.1 billion yen in FY2021 compared with FY2020. The decrease in operating income was mainly due to decreases in both production volume and vehicle unit sales.”
Profits despite tough sales environment
According to the report, sales revenues for the company’s financial services operations dropped 1.4% and operating income dropped 17.4 percent. Broken down by region, sales revenues in Japan decreased by 9.1 percent. North American sales revenue dropped by 10.8 percent.
Sales revenue in Asia, which includes the large Chinese market, only dropped by 4.7 percent. However, operating income increased by 19.9%. The company credits this to cost-reduction efforts and improved marketing.
The final three months of Toyota’s 2021 fiscal year were good. The company saw its profits hit the $7 billion mark — almost double that of the same period of 2020.
While Toyota did see a sales drop, Chief Financial Officer Kenta Kon credited the company’s just-in-time inventory management system for its relative success.
2011 disaster prepared company for COVID
Kon noted the system underwent an overhaul after the 2011 Fukushima earthquake caused disruptions to the supply chain. This helped create a more flexible system better able handle the problems created by the COVID pandemic.
“We are now able to make assessments of alternative products in a speedy manner. That is one of the factors of us being able to mitigate the impact of semiconductor supply shortages,” Kon said in a media briefing.
Better days ahead
Toyota officials stated the auto industry facing a once-in-a-century transformational period. And in response, Toyota has once again returned to its founding philosophy.
“We have defined our mission as ‘Producing Happiness for All,’ and have been clearly indicating our view that we pursue the customers’ happiness as always, even if the products we produce have changed.
“We believe that taking action to realize our vision of “Creating Mobility for All” translates into taking care of our ‘home planet,’ just as we do for our hometown or home country, and leads to sustained efforts to achieve the aims of the SDGs to “make a better world” while ensuring that ‘no one will be left behind.’”
While noting that things are in flux and the world situation could change, the report estimates that FY 2022 will see sales revenue increase by 10.2% compared with FY 2021. Operating income should rise by about 13.8% and income before taxes should increase by 6.1 percent.
These figures are based on strong projected sales for FY 2022. The company expects to sell around 9.1 million Toyota and Lexus brand vehicles. Projected electric vehicle sales are about 2.8 million, a 130% increase over FY 2021.Overall, Toyota estimates a 2.3 trillion yen ($21 billion) profit and 30 trillion yen ($276 billion) in sales for FY 2022. Vehicle sales are expected to strongly recover both in Japan and around the world.
