Nothing, it seems, can put the brakes on earnings at Toyota Motor Co. (NYSE: TM). Not a recall of nearly 10 million vehicles worldwide, nor a steadily strengthening yen. For its first fiscal quarter of 2011, Toyota reported earnings of 190.47 billion yen ($2.2 billion), compared with a loss in the same period a year ago of -77.8 billion yen. The company’s operating profit totaled 211.7 billion yen compared with a loss of -194.9 billion yen a year ago. Analysts were expecting an operating profit of 146 billion yen.
Competitors Nissan and Honda Motor Corp. (NYSE: HMC
), which have already reported earnings, did post better operating profit margins than Toyota’s 4.3%. Operating margin at Honda was 9.9% and 8.2% at Nissan. The difference could be partly attributed to the costs to Toyota of the massive recall.
Toyota sales rose 30% globally, to 1.82 million units. Asian sales gained 47% and North American sales grew 36%. Incentives to U.S. buyers following the recall certainly helped with U.S. sales. Toyota spent as much as $2,500 per car in incentives for U.S. buyers in the quarter. The company said it will reduce US incentives by 10%-20% during the current quarter and into the next.
The strong results led Toyota to increase its profit forecast for the full fiscal year, which ends in March 2011. The company now thinks that profits will rise from 310 billion yen to 340 billion yen. It also expects full-year operating profits to rise from a -77.8 billion yen loss in fiscal 2010 to a gain of 190.5 billion yen. Toyota also said that it plans to build a total of 7.38 million vehicles in its 2011 fiscal year, an increase of 90,000 from its May forecast.
A bit of rain did fall on Toyota’s parade, though. July sales in the U.S. were down 3.2% from a year ago. The sales slide was led by the Prius hybrid, which absorbed a -26.4% drop in sales from a year earlier. Toyota’s luxury car, the Lexus, saw a modest rise in sales of 0.4% compared with a year ago.
Toyota still faces a pile of class-action lawsuits in North America as it tries to re-burnish its image after revelations of sticking accelerator pedals, shifting floor mats, and buggy software led to the recalls. However, the company obviously thinks that the worst of all that is behind them, or they would not be boosting their outlook.
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