Yen weakness boosts sales, Toyota's operating profit doubles | Earnings Report Insights

Toyota's second-quarter profit more than doubled, thanks to the weak yen and strong sales, leading the company to raise its full-year performance forecast by 50%.

On Wednesday, Toyota announced its financial performance for the second quarter of the 2024 fiscal year, ending on August 31, 2023. The report showed that Toyota's Q2 total revenue was ¥11.43 trillion, a 24% increase from the same period last year, which was ¥9.22 trillion. Operating profit reached a record high of ¥1.44 trillion, a year-on-year increase of 155.6%, surpassing analysts' average expectation of ¥1.1 trillion.

In the first half of the 2024 fiscal year, Toyota's revenue was ¥21.98 trillion, an increase of nearly a quarter compared to the same period last year. Net profit more than doubled, reaching ¥2.59 trillion.

Toyota's record-high Q2 operating profit was mainly driven by strong global automotive demand, improved supply chains, and the boost from the weak yen in terms of income calculated in yen.

At the same time, Toyota has raised its full-year profit forecast for the 2024 fiscal year from ¥3 trillion to ¥4.5 trillion, mainly due to the favorable impact of the weak yen.

Toyota stated:

The depreciation of the yen in the first half of the 2024 fiscal year contributed ¥260 billion to the increase in operating profit and is expected to increase full-year operating profit by ¥1.18 trillion. The company currently expects the average USD/JPY exchange rate during the 2024 fiscal year to be 141 (previously expected to be 125).

In terms of production and sales, Toyota stated that global production in the first half of the year reached a record high of 5.058 million vehicles, with global sales reaching 5.172 million vehicles. In the first nine months of this year, the company sold 7.5 million vehicles, including the luxury brand Lexus, of which nearly one-third were hybrid vehicles. During the same period, the company sold approximately 76,000 battery electric vehicles, accounting for about 1% of total sales.

The Japanese automaker stated that in the first half of the fiscal year, its vehicle sales increased in all regions globally, including the United States, Asia, and the domestic market, compared to the same period last year.

Benefiting from the weak yen and strong demand for Toyota products in Japan, North America, and Europe, the company's performance has been strong this year. Compared to a year ago, Toyota's production has significantly recovered from the severe impact of the semiconductor and supply shortages on the automotive industry.

While achieving strong performance, Toyota is accelerating its transition to electric vehicles. The company announced on Tuesday that it will increase its investment in a new battery factory in the United States, planning to invest $13.9 billion to build a battery plant in North Carolina, instead of the previously committed $5.9 billion.

After the financial report was released, the company's stock price rose nearly 5%, closing at a 4.71% increase, at ¥2,712.