Booming sales of fuel-efficient cars helped lift Toyota to its biggest quarterly profit and put the maker of the Prius hybrid on pace to beat General Motors as the world's No. 1 automaker this year.
Despite concerns in the industry about sluggish auto sales in the U.S. and Japan, Toyota Motor Corp. got help from a weak yen and cost cuts in its earnings announced Friday for its first fiscal quarter.
Japan's biggest automaker posted a 32.3 percent jump in profit to 491.54 billion yen ($4.1 billion) for the April-June quarter.
Surging gas prices have proved a big plus for Toyota as drivers flock to its fuel-efficient models, including the Camry, the best-selling model in the U.S., and the Prius gas-electric hybrid.
Even in North America, a market that's proving tough recently, Toyota sold 762,000 vehicles in the April-June period, an increase of 15,000 vehicles from a year ago and helped by the introduction of the Tundra truck and Lexus LS.
“The results are fantastic,” said Tsuyoshi Mochimaru, auto analyst with Lehman Brothers in Japan.
Overseas sales are going strong, and the weak yen, which raises the value of overseas earnings when converted into yen, is making rosy earnings even rosier as Toyota's exports grow, Mochimaru said.
Quarterly sales rose 15.7 percent to 6.523 trillion yen ($54.7 billion). At current exchange rates, that's more than General Motors Corp.'s record quarterly sales of $54.5 billion set in the second quarter of 2006.
But Toyota kept what some analysts say is a conservative forecast for the full fiscal year through March 2008, projecting net profit to inch up just 0.4 percent to 1.65 trillion yen ($13.85 billion) on sales of 25 trillion yen ($209.78 billion).
It also kept its vehicle sales target for the full fiscal year the same at 8.89 million vehicles.
“We posted substantial increases in both revenue and profit, our highest ever quarterly results,” said Toyota Senior Managing Director Takeshi Suzuki.
Toyota surpassed GM in global vehicle sales for the first half of the calendar year, selling 4.72 million vehicle to GM's 4.67 million. Many analysts believe Toyota will likely beat GM for the full year in both sales and production.
The title of world's biggest automaker — which GM has held for 76 years — typically is determined by global vehicle production numbers. For the first six months of the year, Toyota and its group companies built 4.71 million vehicles worldwide, while GM estimates that it produced 4.75 million vehicles during the period.
For the calendar year, Toyota is projecting global sales of 9.34 million vehicles. GM does not give full-year projections, but sold about 9.1 million vehicles in 2006.
Toyota has long surpassed GM in profitability. GM has been losing money in recent years, but reported its third straight profitable quarter this week, on the back of restructuring efforts. Last week, Ford Motor Co. reported a $750 million second-quarter profit.
For the latest quarter, Toyota said it sold 2.16 million vehicles worldwide, up 3.4 percent from 2.09 million a year earlier. Sluggish domestic vehicle sales were offset by greater demand in North America, Europe and the rest of Asia.
Even in Japan, operating profit improved because of solid demand for the Lexus, a model that brings in more profit per car than cheaper models, it said.
The yen's relative weakness against the dollar added 100 billion yen ($839.1 million) to Toyota's bottom line.
Cost reduction efforts offset the damage from higher costs of raw materials, the company said.
Like other Japanese automakers, Toyota was hurt by a temporary closure of a key parts maker in northwestern Japan, which was hit by a 6.8 magnitude earthquake that killed 11 people last month.
But Toyota says it can make up for the production loss of 60,000 vehicles — relatively minute for Toyota — by the end of the year.
Toyota shares inched up 0.1 percent to 7,080 yen ($59.41) shortly before earnings were released.
