Toyota Motor Corp. (NYSE: TM) has doubled its net profit for the fiscal year ending March 2023, riding on strong global vehicle sales and benefiting from a favorable exchange rate. The Japanese automaker announced a net profit of 4.9 trillion yen ($31.9 billion), significantly up from 2.45 trillion yen the previous year, with total sales surging 21% to 45 trillion yen ($290 billion).
The company's performance this past fiscal year exceeded its own profit forecast of 4.5 trillion yen ($29 billion), propelled by a robust sale of 9.4 million vehicles globally, up from 8.8 million in the prior year. Particularly strong were the sales of its hybrid models, although the automaker continues to diversify its offerings across various types of electric vehicles, including battery EVs, plug-ins, and fuel cells.
A weaker yen has proven beneficial for Toyota, as the U.S. dollar averaged about 145 Japanese yen last fiscal year, compared to 135 yen the year before. This currency advantage helped boost profits from overseas markets.
For the January-March 2023 quarter alone, Toyota reported earnings of 997.6 billion yen ($6.4 billion), a significant increase from 552 billion yen in the same period last year, with sales rising to 11 trillion yen ($71 billion) from 9.7 trillion yen.
Looking ahead, Toyota is cautiously optimistic, projecting to sell 9.5 million vehicles in the current fiscal year, with expected growth in the U.S. and other Asian markets. However, the company anticipates a nearly 28% decline in net profit for the fiscal year through March 2025, forecasting a profit of 3.57 trillion yen ($23 billion). This projected decrease is due to planned increases in spending on technology research and investments in what it terms "human capital," including workers at suppliers and dealers.
Toyota's CEO, Koji Sato, emphasized the need for ongoing adaptation and innovation, describing the approach as more intense than Toyota’s traditional "kaizen" method of incremental improvements. The company aims to solidify its foundation in ecological vehicle development while maintaining its reputation for safety and quality.
Despite challenges such as the global shift towards electric vehicles and past disruptions like the semiconductor shortage, Toyota's recent financial outcomes highlight its recovery and strategic positioning for future growth. As the automotive industry continues its shift away from gasoline engines, particularly in EV-forward markets like China, Toyota's strategic investments and product diversification are critical to maintaining its competitive edge.
