Toyota Motor Corp. raised its profit forecast Thursday for the current business year, on favorable currency rates and better-than-expected vehicle sales, but was cautious of the impact of the coronavirus outbreak on its China businesses and on parts procurement for other markets.
Vehicle output at many factories in China has come to a standstill, as automakers have suspended operations in line with government guidelines to prevent the spread of the virus.
The epidemic is likely to wreak havoc on auto sales and production in China in the first quarter, and has disrupted the supply of parts for some carmakers. Hyundai Motor Co. said this week it would have to suspend production in South Korea.
“We are looking very closely at inventories of components that are made in China and used in other countries, including Japan, and at the possibility of alternative production,” Toyota’s Operating Officer Masayoshi Shirayanagi told a news conference.
According to an estimate by S&P credit analyst Vittoria Ferraris, “up to one-half” of vehicles and components that would normally be produced in China could be affected if shutdowns are extended further.
Production at many auto and auto component plants across China, including Toyota’s, has currently been halted through to Feb. 9.
The Japanese auto giant now anticipates a group net profit of ¥2.35 trillion ($21 billion) in the year ending March 31, up from ¥2.15 trillion estimated earlier, but the latest estimate did not take into account the impact of the epidemic, Toyota said.
The outlook is based on a new assumption for the yen to average around ¥108 to the U.S. dollar, rather than the ¥107 anticipated previously. A weaker yen pushes up overseas profits when converted into the home currency.
Toyota said last week it had decided to delay the restart of four auto plants in China until sometime after Monday, rather than early February as originally scheduled, due to the outbreak of the virus and on the request of local authorities.
“We still cannot decide when exactly we will be able to restart our plants in China,” said Shirayanagi.
In October to December, Toyota’s sales in Asia tumbled 12.5 percent, while sales in North America, the automaker’s biggest market, slipped 1.8 percent.
Toyota plans to sell 10.73 million vehicles worldwide in the current fiscal year, up 30,000 units from the earlier projection.
The latest figure compares with 10.60 million in fiscal 2018 and includes vehicles sold by its subsidiaries, minivehicle manufacturer Daihatsu Motor Co. and truck-maker Hino Motors Ltd.
In the April-December period, Toyota said group net profit gained 41.4 percent from a year earlier to ¥2.01 trillion.
Group operating profit rose 6.2 percent to ¥2.06 trillion on sales of ¥22.83 trillion, up 1.6 percent — a record for the reported nine months.
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