Toyota Motor Corp. made a profit of over 2.3 trillion yen (about $21.3 billion) for the financial year ended March 31, 2016, an increase of 6.4 percent from the previous year, the company announced Wednesday. TMC’s revenue of 28.4 trillion yen was also higher by 4.3 percent compared to the last financial year.
The increase in revenue and profit came despite a fall in the number of vehicles sold, which fell to short of 8.7 million units, a decrease of 290,536 units from the last fiscal year. With the exception of North America, vehicle sales fell in all other regions, including Japan.
Executive Vice President Takahiko Ijichi provided an explanation: “The positive factors such as cost reduction efforts and favorable foreign exchange rates more than offset the negative factors such as decreased vehicle sales and increased expenses, particularly labor costs and R&D expenses.”
However, citing headwinds from forex markets — the same reason that led to its record profits for three straight years — the company has provided guidance of a profit of 1.5 trillion yen for the current financial year, ending March 2017, based on an estimated revenue of 26.5 trillion yen, a 35 percent fall drop from the profit for the fiscal year gone by.
The number falls far short of 2.25 trillion yen that was the average estimate of 28 analysts polled by Reuters.
As the yen strengthens against the dollar — it was trading at above 125 to the dollar in June last year and has gained to below 109 early Wednesday — the automaker’s profit will take a hit, since the company has significant overseas sales. In its guidance, expecting further gains by the yen, TMC used an average exchange rate of 105 yen to the dollar.
TMC also forecast an increase in vehicle sales, expecting to sell 8.9 million units globally in the 12 months to March 2017.
The forecast did not account for the effects from suspension of assembly line operations in Japan due to the earthquake last month in Kumamoto region.