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Toyota says net profit rises on weak yen, cost cuts

Toyota said Tuesday (Aug 5) its net profit in the three months through June came in at a record US$5.7 billion, with the rise largely thanks to cost-cutting and a weak yen.

TOKYO: Toyota said Tuesday (Aug 5) its net profit in the three months through June came in at a record US$5.7 billion, with the rise largely thanks to cost-cutting and a weak yen. The world's biggest automaker also said it was on course to deliver a profit of 1.78 trillion yen (US$17.4 billion) in the current fiscal year.

However, the firm trimmed its calendar year global sales target to 10.22 million units, from an earlier estimate of 10.33 million, as demand across Asia, including Japan, slipped in the latest quarter from a year ago.

Japanese car companies have been big winners over the past year as a sharp drop in the yen inflated their repatriated profits, while sales accelerated in key markets including the US and China. Toyota's results come after rivals Nissan and Honda both booked fatter profits in the quarter.

On Tuesday, Toyota said it earned 587.8 billion yen in the quarter, up nearly 5.0 per cent from 562.2 billion yen a year earlier. Sales rose 2.2 per cent to 6.39 trillion yen, it said. The firm said it sold 2.24 million vehicles globally in the quarter, slightly up from a year ago.

Toyota kept the title of world's biggest automaker with 2013 sales of 9.98 million vehicles, outpacing Germany's Volkswagen and General Motors, as it looks to become the first automaker to break the 10 million vehicle sales barrier.

In the latest three months, Toyota said sales in North America and Europe rose, while demand in Japan and the rest of Asia slipped. The automaker pointed to an April sales tax hike in Japan among the factors for the weaker results at home.

"Our numbers are steadily recovering (in Japan)," Toyota managing director Takuo Sasaki told reporters. "In June and July, the figures were almost the same as the same period last year. It is too early to say that we have hit the bottom though."

The Japanese auto industry has benefited from Prime Minister Shinzo Abe's bid to kickstart the long-lumbering economy, with huge monetary easing measures from the premier's hand-picked team at the Bank of Japan helping push down the currency. The weaker yen boosts Japanese manufacturers' bottom lines by making them more competitive overseas and inflating repatriated overseas profits.

"The impact of a weak yen is fading, although its level right now is still positive for the auto sector," said Tatsuya Mizuno, auto analyst with Mizuno Credit Advisory. "But foreign exchange rates are always an unpredictable factor."

In Japan, vehicle sales fell by 19,950 units to 505,827 for the quarter, while sales in North America rose by 21,753 units to 710,409 units. Sales in Europe came to 207,481 units, an increase of 14,970 units, while those in Asia stood at 385,376 units, a decrease of 9,490 units.

Toyota's rival Honda said last week its latest quarterly net profit jumped 19.6 per cent to 146.5 billion yen, while Nissan said its net profit for the April-June quarter soared 37 per cent to 112.13 billion yen.

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