Toyota Motor more than doubled its second-quarter profit and significantly increased its full-year outlook on Wednesday, benefiting from a weaker yen currency and strong global sales.
The world's top-selling automaker reported a record operating profit of 1.44 trillion yen ($9.5 billion) in the three months ending in September, a 155.6% increase from the previous year.
Toyota experienced increased sales in all global regions, including the United States, Asia, and its home market, over the six months ending in September compared to the same period the previous year.
Toyota, after being criticized for being slow to embrace battery electric vehicles, unveiled a comprehensive revamp of its EV strategy in June, committing to improving the driving range and reducing electric vehicle costs.
It now appears to be reaping the benefits of market optimism regarding that strategy and renewed interest in its lineup of gasoline-electric hybrids, particularly as enthusiasm around EVs wanes, especially in the United States where consumers are dealing with higher financing costs.
Hybrids, which tend to be more cost-effective than some pure battery-powered EVs, still account for over 90% of Toyota's electrified car sales. Hybrid sales rose by 41% to 888,000 vehicles in the quarter ending in September.
However, Toyota faces challenges, particularly in China, where domestic EVs are on the rise and the market is rapidly transitioning to battery-powered cars, impacting rivals like Nissan Motor and Honda Motor. CFO Yoichi Miyazaki mentioned that China is currently experiencing severe price competition, particularly in the battery EV segment.
Toyota also faces competition in Southeast Asian markets due to increasing Chinese investments driven by higher demand for EVs.
The strong quarterly results should support Toyota's growth plans. The company announced it would increase investment by $8 billion in a North Carolina plant to manufacture batteries for hybrids, plug-in hybrids, and full-battery vehicles.
Toyota raised its full-year profit forecast to 4.5 trillion yen from 3 trillion yen, primarily due to favorable foreign exchange rate effects, with the weaker yen accounting for a significant portion of the revision.
Toyota shares rose by 4.7% following the release of the results, contributing to a 2.4% increase in Japan's benchmark Nikkei index.
The yen hit a one-year low against the dollar, stabilizing following renewed threats of currency intervention from Japan.
Toyota assumed an average rate of 141 yen per dollar for its calculations for the 2023/24 financial year, compared to 125 yen previously, and also announced a 100 billion yen share buyback.