Toyota aims for 10% profit jump, robust EV sales as chip woes abate

TOKYO, May 10 (Reuters) – Toyota Motor Corp ( 7203.T ) said on Wednesday it expects operating profit to rise 10% this business year, with pure electric vehicle (EV) sales rising fivefold amid an easing in the global supply chain disruptions from chip shortages.

The growth plan was unveiled by new CEO Koji Sato, installed last month, and signals a more aggressive push towards electrification by the Japanese firm which has previously taken a slow approach to all-electric cars, arguing the strategy will provide more choice for consumers . .

The world’s largest carmaker by sales forecasts battery EV sales, including sales of its luxury Lexus brand, will reach 202,000 worldwide in this business year to March 2024 – more than a fivefold increase from last year’s 38,000 units.

Toyota forecast operating profit would rise to 3.0 trillion yen ($22.2 billion) this business year, in line with an average analyst forecast of 3.02 trillion yen.

That target came after operating profit for the fiscal fourth quarter through March rose by more than a third to 626.9 billion yen — slightly ahead of the average profit of 553.46 billion yen estimated by 10 analysts, according to Refinitiv data.

Toyota’s strategy has led to pressure in China, the world’s biggest car market, where nimble local brands such as BYD Co Ltd ( 002594.SZ ) have gone aggressively with battery electric cars, undermining the dominance of established foreign brands.

But Sato said demand for purely battery-powered vehicles in China largely represented a new need in the market and was separate from demand for hybrid vehicles.

“We would like to work on both sides,” he said.

The profit target has been helped by a weak yen boosting the value of overseas sales, and higher production volumes offsetting the impact of rising material costs. Reflecting the impact of the weak yen, revenue for the business year ended in March this year grew to a record 37.15 trillion yen.

Toyota shares, which were nearly flat before the earnings release, rose immediately after the release, rising as much as 2.5% before the gain narrowed to 0.8%.

EV ACCELERATION

The new sales target for electric cars, still a fraction of industry leader Tesla ( TSLA.O ), will boost Toyota’s battery electric cars to nearly 2% of total sales volume, up from just 0.4% of total car sales in the last fiscal year.

“We expect an increase in (total) sales volume in all regions and production volume of 10.1 million (vehicles), due to such factors as … improvement in semiconductor supply,” Toyota said in a statement. This will represent production growth of 11% compared to the previous year.

Toyota has said it will introduce 10 new battery-powered cars, aiming to sell 1.5 million electric cars a year by 2026, in a bid to raise its game in the EV sector, where it has been overtaken by new Chinese carmakers so as well as Tesla.

Toyota will accelerate efforts to provide “appropriate” solutions for different regions, Sato said, adding that new models will range from compact commercial to luxury vehicles and be mainly centered on the United States and China.

A previously announced dedicated unit to focus on next-generation battery EVs, known as the BEV Factory, will consist of three platforms focusing on vehicle chassis, electronics and software, he said.

The company decided to abolish a zero-emissions vehicle design department, known as the ZEV factory, it had set up in Japan.

Although Toyota has succeeded in retaining its crown as the world’s best-selling carmaker, it faces a number of challenges, including safety testing problems at its subsidiary Daihatsu and growing pressure from green investors.

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Reporting by Daniel Leussink; Editing by Kenneth Maxwell

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