Toyota’s Profits Surge as Costs Shrink

Toyota Motor Corp.’s operating and net profits in its fourth fiscal quarter ended March 31 jumped 43% to 630 billion yen ($5.7 billion) and 21% to 481 billion yen ($4.4 billion), respectively.

Revenue for the period advanced 2% to 7.6 trillion yen ($71.4 billion). Unit retail sales, including deliveries by its Daihatsu small-car and Hino commercial truck affiliates, rose 2% to 2.6 million vehicles,

Toyota attributes the strong quarterly results to cost-cutting and lower spending on sales, recalls and warranty work. The company says cost reductions alone offset 30 billion yen ($284 million) in unfavorable exchange rates.

Toyota’s weakest market was North America, where the company posted a quarterly operating loss of 39 billion yen ($355 million). Still, the red ink was nearly 50% less than in the same period last year. The region aims to raise its operating margin from 1.3% for just-ended full fiscal year to 8% by 2020.

For the full fiscal year ended March 31, Toyota’s net income jumped 27% to a record 2.5 trillion yen ($23 billion). Results were buoyed by a gain from the revised tax structure in the U.S. and a comparison with weak results last year. Operating profit climbed 17% to 2.4 trillion yen ($22 billion).

Toyota’s revenue for the fiscal year rose 6% to a record 29.4 trillion yen ($268 billion). Unit retail sales advanced 2% to 10.44 million cars and trucks. But wholesales were flat at 8.96 million units.

The company expects that a strengthening yen will cut operating profits 4% in the current fiscal year. Net income is likely to shrink 15% against last year’s one-time tax benefit in the U.S. Toyota anticipates flat wholesale volume this year.