Toyota ekes out weakest first quarter profit in nine years as pandemic slams car sales

Toyota Motor eked out its smallest quarterly profit in nine years as the coronavirus pandemic halved its car sales and nearly wiped out its bottom line.

However, shares in Japan’s top automaker rose 2.3% in a weaker broader market as analysts had expected a loss, while comments from a company spokesman on a faster-than-expected sales recovery in some countries also provided support.

Toyota’s operating profit plunged 98% to 13.9 billion yen ($131.73 million) for the three months ended June, better than a consensus estimate for a loss of 179 billion yen drawn from a Refinitiv poll of seven analysts.

The sharply lower earnings underline the challenges the industry is facing due to the pandemic that has shuttered factories and kept customers out of dealerships.

Toyota reiterated its annual operating profit forecast of 500 billion yen, its weakest in nine years, even as it said its vehicle sales would decline less than expected.

“The pace of recovery in a number of regions has been faster than we had initially forecast,” Toyota spokesman Ryo Saki said at a briefing on Thursday.

“But the virus situation continues to place many uncertainties on the business outlook … and we see a possibility that our forecast could change.”

Toyota expects its global sales to fall 13% in the year to March 2021, versus a prior outlook for a 15% drop.

But that would still mark its lowest sales in nine years.

The maker of the RAV4 SUV crossover and the Prius gasoline hybrid expects to sell 9.1 million cars this year, versus 10.46 million last year, hurt by a 14% drop in sales in North America – Toyota’s biggest market that accounts for about a quarter of its global sales.

It had earlier forecast sales of 8.9 million units.

In the first quarter, consolidated global sales slumped 50% to 1.16 million units, led by a 62% tumble in North America. Toyota expects sales returning to normal in January-March 2021, up 5% on the year.