Toyota Motor Corp. (TM) posted earnings per share of ¥165.70 ($1.65) in third-quarter fiscal 2014 (ending Dec 31, 2013), significantly higher than ¥31.55 (39 cents) recorded a year ago. Consolidated net income surged to ¥525.5 billion ($5.3 billion) from ¥99.9 billion ($1.2 billion) in the year-ago quarter.
Consolidated revenues in the quarter escalated 23.8% year over year to ¥6,585.0 billion ($65.9 billion). Unit sales augmented 9.5% to 2.57 million units. Unit sales rose 13.4% to 540 thousand units in Japan, 9.9% to 664 thousand units in North America and 16.8% to 223 thousand units in Europe. However, sales declined by 1.4% to 422 thousand units in Asia.
Operating income jumped to ¥600.5 billion ($6.0 billion), up from ¥124.8 billion ($1.5 billion) a year ago. The significant increase in operating income is due to favorable impacts of a weaker yen, increased vehicle sales and cost containment strategies.
Segment Results
Automotive segment’s revenues rose 24.7% to ¥6,096.6 billion ($61 billion) in the quarter while operating income surged significantly to ¥515.6 billion ($5.2 billion).
Financial Services segment’s revenues scaled up 21.1% to ¥364.9 billion ($3.6 billion), while operating income declined 2.5% to ¥67.3 billion ($673.1 million).
All Other businesses revenues improved 6.2% to ¥278.4 billion ($2.8 billion) and operating income increased 34% to ¥20.7 billion ($206.7 million).
Financial Position
Toyota had cash and cash equivalents of ¥1,843.4 billion ($18.4 billion) as of Dec 31, 2013, compared with ¥1,718.3 billion ($21.2) as on Mar 31, 2013. Total debt amounted to ¥16,373.0 billion ($163.7 billion) as of Dec 31, 2013, compared with ¥14,131.8 billion ($174.5 billion) as on Mar 31, 2013.
In the first nine months of fiscal 2014, operating net cash flow improved to ¥2,727.0 billion ($27.3 billion) from ¥1,746.2 billion ($21.6 billion) recorded in the year-ago period.
Fiscal 2014 Guidance
Toyota raised its projections for fiscal 2014. Consolidated revenues are now estimated to be ¥25,500 billion ($255 billion), an increase of 15.6% from fiscal 2013. Earlier, the company projected revenues of ¥25,000 billion. Operating income is expected to rise 81.7% year over year to ¥2,400 billion ($24 billion). Net earnings are expected to surge 97.5% to ¥1,900 billion ($19 billion).
Our Take
Toyota plays a pivotal role in shaping the global automobile industry. The automaker dominates the hybrid market with its Toyota and Lexus offerings as well as the Prius hybrids. Toyota is banking on emerging markets, including Asia, for its sales growth. However, continued safety recalls and subdued macroeconomic factors are detrimental to its brand image and growth prospects.
Currently, Toyota carries a Zacks Rank #3 (Hold). Other stocks in the automobile sector which are worth considering include Dongfeng Motor Group Company Limited (DNFGY), Geely Automobile Holdings Ltd. (GELYY) and Volkswagen AG (VLKAY). All the stocks carry a Zacks Rank #2 (Buy).
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