Tokyo: Toyota Motor Corp is set to post record growth for the year just ended - with a likely $10 billion surge in operating profit. But the mood at its HQ in Japan's prosperous automotive heartland is cautious as executives warn of a leaner year ahead.
Japan's most valuable listed company is shifting to a new phase of much slower but more stable growth, senior executives said, as the burst of gains from a weak yen and Prime Minister Shinzo Abe's stimulus policies fades.
That trend, fed also by an increase in Japan's sales tax and slowdowns in key overseas markets such as Thailand, could see the world's largest carmaker eventually losing its crown to an ascendant Volkswagen AG. "Last year's pace was abnormal in the context of sustainable growth," said a Senior Executive. A slowdown for the country's biggest manufacturing profit earner will bode poorly for Japan's economic outlook.
A source close to Toyota even stated that it may project a fall in profit for this fiscal year, a view echoed by some analysts, who note its typically conservative stance."We cannot rule out the possibility operating profit guidance will be flat or down year-on-year," said Tatsuo Yoshida, Analyst, Tokyo-based Barclays autos. The dollar has surged more than 25 per cent against the yen over the past 17 months, spurred by Abe's easy-money policies, and the auto industry has been a big beneficiary, especially export-oriented Toyota, Mazda Motor Corp and Fuji Heavy Industries Ltd.
In 2013, Japan's auto exports jumped 13 percent to 10.4 trillion yen, while their share of the country's total exports edged up 0.5 percentage point to 14.9 percent.
Currency gains lifted operating profit at Japan's seven carmakers by 1.6 trillion yen in the nine months to December. At Toyota, yen weakness will account for more than four-fifths of its expected operating profit rise in 2013/14.
In the current year from April 1, however, Barclays' Yoshida forecast that currency moves would cut Toyota's operating profit by 20 billion yens.
