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Toyota raises FY2019 net profit outlook, but wary of virus impact

Logo of Toyota Motor (Getty/Kyodo)

TOKYO (Kyodo) -- Toyota Motor Corp. on Thursday raised its group net profit forecast for the current business year on an expected fall in the yen but was cautious of the impact of the coronavirus outbreak on its China businesses and on parts procurement for other markets.

    The Japanese auto giant now anticipates a group net profit of 2.35 trillion yen ($21 billion) in the year ending March 31, up from 2.15 trillion yen estimated earlier. The latest estimate did not take into account the impact of the epidemic, Toyota said.

    Toyota also revised up its group operating profit forecast to 2.50 trillion yen from 2.40 trillion yen, while it left its sales projection unchanged at 29.50 trillion yen.

    "We are in the middle of assessing whether disruptions of parts procurement from China would influence manufacturing in other markets," Toyota Operating Officer Masayoshi Shirayanagi told a press conference, adding the company can only "closely watch" developments at present.

    Toyota Executive Vice President Didier Leroy also told the same conference, "The impact of this new additional problem is really unclear at this stage and can change very quickly in the following days or weeks," referring to the coronavirus.

    Toyota still cannot decide on the resumption of operations at its four auto plants in China, delayed by a week to sometime after Monday in line with requests by local authorities to prevent the spread of the virus, Shirayanagi said.

    "We are currently evaluating the situation of inventories and the possibility of alternative production," he said.

    The Chinese market has become a bigger presence for Toyota in recent years. Even as rival European carmakers struggle in the world's biggest auto market, where new car sales fell for the second straight year in 2019, Toyota sold some 1.62 million vehicles in the year, up 9.0 percent from the previous year.

    While the U.S. market is still the largest for Toyota at 2.38 million units in 2019, down 1.8 percent from the year before, sales in China have surpassed those in Japan, which came in at 1.61 million units, up 2.9 percent.

    The strong sales in China have also helped the Toyota group climb to second place in the 2019 global auto sales rankings, surpassing the Nissan Motor Co., Renault SA and Mitsubishi Motors Corp. alliance and finishing behind only Volkswagen AG of Germany.

    The coronavirus outbreak is clearly an "additional uncertainty" for the Chinese market but Toyota had forecasted continuance in growth, Leroy said.

    Toyota said it sees a favorable foreign exchange rate for the rest of the year. A weaker yen pushes up overseas profits when converted into the home currency.

    It expects the dollar and the euro to average 108 yen and 121 yen for the full year, compared to its earlier estimates of 107 yen and 118 yen, respectively.

    Toyota also plans to sell 10.73 million vehicles worldwide in the current fiscal year, up 30,000 units from the earlier projection.

    The latest figure compares with 10.60 million in fiscal 2018 and includes vehicles sold by its subsidiaries, minivehicle manufacturer Daihatsu Motor Co. and truck maker Hino Motors Ltd.

    In the April-December period, Toyota said group net profit gained 41.4 percent from a year earlier to 2.01 trillion yen. Group operating profit rose 6.2 percent to 2.06 trillion yen on sales of 22.83 trillion yen, up 1.6 percent, a record for the reported nine months.

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