Toyota Q1 net profit soars to $9.1 billion

TOKYO — Toyota reported on Tuesday a quarterly net profit of $9.1 billion as global production rebounded after major supply disruptions a year ago, but warned of "severe" competition in China.

The Japanese giant, the world's biggest automaker by sales, said net profit in the three months to June surged 78 per cent year-on-year to 1.31 trillion yen ($9.1 billion).

Sales in the firm's first fiscal quarter were 10.55 trillion yen, up 24.2 per cent from a year ago.

Toyota, including its high-end Lexus brand, sold 2.538 million vehicles worldwide, up 8.4 per cent from a year ago.

The figures beat market expectations, sending the company's stocks up almost three per cent after the announcement.

Major automakers are enjoying a robust surge of global demand after the COVID-19 pandemic slowed manufacturing activities. 

Severe shortages of semiconductors had also limited production capacity for a host of products ranging from cars to smartphones.

Toyota said that chip supplies were improving and that it had raised product prices and worked with suppliers to bring production activities back to normal.

Toyota has said its global production in the first six months of the year reached a record 5.6 million units, while sales reached 5.4 million, reinforcing its position as the world's biggest carmaker. 

However, the company is still experiencing delays for deliveries of new vehicles to customers, it added.

Toyota maintained its annual targets, including net profit of 2.58 trillion yen and sales of 38 trillion yen.

"The sales volume increased in all regions due to productivity improvement efforts promoted with suppliers, in addition to an improvement in the supply and demand situation for semiconductors, which continued for a while," the company said in a statement.

The yen's slide and foreign exchange fluctuations added 115 billion yen to Toyota's operating profit.

A better mix of models, improving sales and price revisions in overseas markets also boosted its earnings, Toyota said.

However, soaring materials prices impacted the company to the tune of 230 billion yen. 

But Toyota said it believed "market conditions, such as those for precious metals, have stabilized compared to last year".

While Toyota registered rising earnings in major markets, it suffered falling profits in China, mainly due to forex fluctuations and increased marketing costs to compete with rivals.

"Although the competitive environment is becoming increasingly severe due to the rise of local brands, Toyota and Lexus vehicle sales are steadily increasing," the company said.