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Toyota, which on Tuesday reported record first-quarter net
profit for the third consecutive year, enjoyed rising China
sales but price wars were sapping profit, company officials said
at an earnings briefing.
China auto sales fell each month in the quarter as economic
growth crawls at its slowest pace in 25 years, draining consumer
sentiment. Analysts expect a stock market crash from mid-June to
have a knock-on effect and further drag on vehicle sales.
Japanese automakers are widely expected to fare better than
rivals due in part to sales of new sports utility vehicles
(SUVs). But at Toyota, price competition has particularly hit
its RAV4 as car makers seek to capitalize on a vogue for SUVs.
"In April-June, vehicle sales have progressed firmly but as for
profitability, we can't be optimistic," said Managing Officer
Tetsuya Otake.
Spokesman Hiroshi Hashimoto called the market "extremely hard"
and added "there isn't much profitability in China."
For April-June, Toyota said net profit rose 10 percent to 646.4
billion yen ($5.21 billion), beating the 607.5 billion yen
average estimate of 11 analysts polled by Thomson Reuters.
Operating profit rose 9.1 percent to 756 billion yen on revenue
that grew 9.3 percent to 6.99 trillion yen.
The automaker attributed the earnings rise to general
cost-cutting and currency gains from a strong U.S. dollar, which
increased the value of income when converted into yen.
Those factors made up for a 0.4 percent decline in global retail
sales at 2.5 million vehicles. Toyota said the fall was due to
economic slowdown in Southeast Asia and lower sales of mini-cars
in Japan, which were recently subject to a tax hike.
Toyota left its net profit forecast for the year through March
at 2.25 trillion yen, and raised its revenue estimate by 1
percent to reflect increased currency gains. It also raised its
global sales view by 0.6 percent to 8.95 million vehicles on
improvement in the Japanese and North American markets.
Toyota's shares ended down 1.0 percent ahead of the earnings
results, while the broader Tokyo market closed flat.
(Reporting by Minami Funakoshi; Editing by Chang-Ran Kim and
Christopher Cushing)
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