Toyota Corporation posts record net profit

Toyota announced last week its financial results for the fiscal year ended March 31 and the automaker’s earnings hit three years in a row of record figures. The world’s biggest automaker by sales recorded once again a profit increase for last year, but the current one will not be as favourable.

Even if the total consolidated vehicle sales totalled 8,681,328 units, a decrease of 290,536 units compared to the previous fiscal year, net revenues for the period rose 4.3% to 28.4031 trillion yen, operating income increased from 2.7505 trillion yen to 2.8539 trillion yen, while net profit jumped 6.4% from 2.1733 trillion yen to 2.3126 trillion yen ($21.24bn).

Major factors behind the increase included some cost reduction efforts and favourable currency fluctuations, the company said. However, with a much stronger yen, Toyota forecasts its net profit will drop 35% for the year ending March 2017 to 1.5 trillion yen ($13.8bn), based on an exchange rate of 105 yen to the US dollar and 120 yen to the euro. The dollar averaged a far more favourable 120 yen last year.

“We have benefited from an exchange rate tailwind that has helped raise our earnings above the level of our true capabilities,” President Akio Toyoda, said in a statement. “Although this has enabled us to take on new challenges that set of circumstances is likely to change for the worse this year.”

The automaker also said this projection did not include the effects of suspending operations on its plants in Japan in the aftermath of the deadly earthquakes that struck the island of Kyushu last month.

Toyota halted the output because of parts shortage in stages between April 15 and 23, for the production to be subsequently restarted in stages from April 25 through 28, and, following a scheduled holiday period, all remaining vehicle assembly lines were operational from May 6 through 14.

According to estimates made by analysts, a full week of loss production would total less than 90,000 vehicles and cost the company between 50 billion to 70 billion yen ($460m to $644m).

Meanwhile, the Japanese automaker said its new engine manufacturing facility in Brazil was now fully operational, nearly 4 years after it announced the investment.

Recall that Toyota committed in 2012 to build its first engine plant in Brazil, as it planned to boost local production on the grounds that the regional market was expected to consistently grow.

And it did, but the country has recently entered into a serious economic crisis and the automotive industry has been deeply affected.

Nevertheless, Toyota officially opened last week the new facility built on a plot of land that covers an area of 872,500 m2 in the city of Porto Feliz, following an investment of around 170 million dollars.

With a capacity to produce up to 108,000 units annually, the factory builds 1.3-litre and 1.5-litre four-cylinder engines that comes with Dual VVT-I and Flex Fuel ((in which ethanol is mixed in to the gasoline), power units specifically designed to fit in the newly updated Etios compact sedan and hatchback versions.

This model is also built in Brazil, at Toyota’s Sorocaba plant, aimed specifically for the Latin American and Caribbean markets. Toyota production in Brazil dates back to 1959 with a Complete Knock Down facility, company’s first manufacturing affiliate outside of Japan.