Toyota posts 10 pct rise in Q2 operating profit, above expectations

A Toyota logo is seen on media day at the Mondial de l'Automobile the Paris auto show in Paris France

The Japanese auto group is now expecting operating profit to come in at ¥2 trillion ($17.6 billion), instead of ¥1.85 trillion forecast in August, based on its estimate that the yen will trade around ¥111 to the United States dollar. Without the help of the currency, it may have been hard to forecast profit growth, he said.

Last year, Toyota suffered its first drop in annual profit in five years, which it blamed on the cost of customer incentives in the key USA market. That would still fall short of the 8.97 million vehicles sold the previous fiscal year.

Nagata said the USA market remains tough as the company sees demand shifting to light trucks from passenger cars, the segment where Japanese carmakers are typically strong.

Toyota's operating income came in at ¥522.2 billion ($4.6 billion), raising 10 percent from the ¥474.6 billion in the same quarter a year earlier as yen depreciation and cost reductions made up for lower revenues in Japan and North America.

Sales in Japan were 1,087,354 units, up by 8,544.

For the fiscal year ending March 31, 2018, the company revised its consolidated vehicle sales forecast from 8.9 million units to 8.95 million units, in consideration of the latest sales trends worldwide.

An increase of ¥160 billion in marketing activities and additional ¥50 billion in expenses mainly contributed to the decrease.

Following an upbeat second-quarter earnings result, Toyota has adjusted its annual profit outlook for the second time this year as it saw better sales result in the USA market.

Nagata said that profitability has been under pressure amid a glut of used cars which help push down the residual value of new models ranging from compact to high-end vehicles and put pressure on prices.

Toyota is planning to build a new plant in the US, which will be run with another Japanese automaker Mazda Motor Corp., although its site has not yet been announced.

"The competition surrounding electric vehicles is severe.we are hoping that all kinds of firms will participate". Despite being the leader hybrid auto maker, Toyota has been relatively slow in the EV business, but as the market could rapidly expand, the company is beginning to boost its efforts in EV production.

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