TM FY10 ending 3/31/10:
Profits decreased by yen appreciation against both US$ (101Y/$ in 2009 to 93Y/$ in 2010) and Euro.
Toyota Motor Corp. (TM) posted a profit of ¥209.5 billion ($2.3 billion) or ¥66.79 (72 cents) per share for its fiscal 2010 ended March 31, 2010, in stark contrast to a loss of ¥437 billion ($4.7 billion) or ¥139.13 ($1.50) per share a year ago.
Sales expansion in Asia, reductions in variable and fixed costs and increased profits in the company’s Financial Services segment were the principal factors behind the improvement in results, despite the backlash of Toyota’s series of automotive safety recalls in the last few months.
However, revenues in the year fell 7.7% to ¥18.95 trillion ($204 billion), driven by a 9.7% decrease in overseas vehicle sales to 5.1 million units, resulting from sales declines in Europe and other regions. This was partially offset by an 11.2% increase in vehicle sales in Japan to 2.2 million units due to the launch of new products in the market.
Operating income improved to ¥147.5 billion ($1.6 billion) from an operating loss of ¥461 billion ($5 billion) in fiscal 2009. This was attributable to the positive impact of ¥520 billion ($5.6 billion) from cost reduction measures, reduction of ¥470 billion ($5.1 billion) in fixed cost, an increase in profit of ¥270 billion ($2.9 billion) in the Financial Services segment and of ¥38.5 billion ($414 million) from other factors. These factors were offset by negative impacts from sales volume and mix of ¥370 billion ($4 billion) and changes in exchange rates of ¥320 billion ($3.4 billion).
Segment Results
In the Automotive segment, revenues slid 7.4% to ¥17.2 trillion ($185 billion). Consolidated vehicle sales decreased 330,194 units to 7.24 million. Operating loss of ¥86.4 billion ($930 million) was narrower than ¥394.9 billion ($4.2 billion) in fiscal 2009, driven by cost reduction measures.
Revenues declined in all the geographic sales regions. Figures shrank 8% to ¥11.22 trillion ($121 billion) in Japan, 9% to ¥5.67 trillion ($61 billion) in North America, 29% to ¥2.15 trillion ($23 billion) in Europe, 2% to ¥2.66 trillion ($29 billion) in Asia and 11% to ¥1.67 trillion ($18 billion) in Other regions.
In the Financial Services segment, revenue fell 9.6% to ¥1.25 trillion ($13.4 billion). Operating income was ¥247 billion ($2.7 billion) compared with an operating loss of ¥72 billion ($775 million) in fiscal 2009. The improvement was attributable to provision for credit losses, allowance for residual value losses and valuation gains on interest rate swaps.
In all other businesses, revenues ebbed 20% to ¥947.6 billion ($10.2 billion). Operating loss was ¥8.9 billion ($96 million) in contrast to an operating profit of ¥9.9 billion ($107 million) a year ago.
Financial Position
Toyota had cash and cash equivalents of ¥1.87 trillion ($20 billion) as of March 31, 2010, which deteriorated from ¥2.44 trillion ($26 billion) as of the year-ago period due to a decline in cash flow from investing and financing activities. Long-term debt amounted to ¥9.23 trillion ($99 billion) as of March 31, 2010. The long-term debt to capitalization ratio stood at 47%.
In fiscal 2010, Toyota had a net cash flow of ¥2.56 trillion ($27.5 billion) from operating activities, an increase from ¥1.48 trillion ($16 billion) in the prior fiscal year, primarily driven by an improvement in net income and an increase in deferred income taxes. Meanwhile, capital expenditures reduced to ¥604.5 billion ($6.5 billion) from ¥1.36 trillion ($15 billion) a year ago.
Looking Forward
Toyota anticipates its results to improve in fiscal 2011 compared with fiscal 2010. The automaker expects consolidated vehicle sales of 7.29 million units for the fiscal year, a year-over-year increase of 53,000 units due to higher sales volume in regions outside of Japan. Consequently, consolidated revenues are expected to improve 1.3% to ¥19.2 trillion ($207 billion), operating income to increase 89.8% to ¥280 billion ($3 billion) and net income to rise 48% to ¥310 billion ($3.3 billion).
Toyota aims to cut production capacity in Japan by about 20 percent within five years as it shifts output to other countries, particularly emerging markets. The carmaker plans to reduce domestic capacity to about 3.2 million vehicles by 2015 from 3.9 million currently.
My comments:
1. Their profits in FY10 came entirely from their financial division.
2. YOY debt is up, cash is down.
3. Unit sales are expected to go up trivially, from 7.24M to 7.29M, 2010 to 2011.
4. revenues are expected to go up trivially as well, from 204B$ to 207B$.
5. dividend has been unreliable
6. EPS: 1.44$/ADR in 2010FY, goes to 2.10$/ADR in 2011FY
7. PE: 77/2.10 = 37, which is way too high. Poor profits for FY 2009 and 2010 can be forgiven as "one-time events" due to the recession and recalls, but by 2011 those problems should be behind them.
8. Overall, not very encouraging. |
