Toyota Q1 profit up 35 pct on U.S. sales, yen

TOKYO, Aug 7 Edwina Gibbs writing for Reuters reported that Toyota Motor Corp, Japan's largest automaker, reported a powerful jump in profits for the first quarter on Wednesday, helped by a robust performance in the United States and a soft yen.

m a year earlier to 394.52 billion yen ($3.26 billion).

The result was well ahead of analysts' estimates, which had ranged from 274 billion to 328 billion yen, although a lack of historical data had made forecasting difficult.

Toyota added that despite the lack of clear historical data, it could confidently call the result a first-quarter record.

"We have had extremely strong growth in sales and the way the company has come together as a group to reduce costs also helped," said Toyota finance director Takeshi Suzuki.

Toyota's operating margin came in at 9.8 percent, a result that goes some way towards answering complaints that it has for too long lagged rivals Honda Motor Co and Nissan Motor Co in this key measure of earnings efficiency.

Second-ranked Honda, the only other Japanese automaker to release first-quarter earnings, last month reported a 13 percent rise in operating profit to 170.82 billion yen and an 8.8 percent operating margin.

Pushing up Toyota's profits were strong U.S. sales of vehicles like the Camry and the Highlander sports utility as well as a weaker yen in the period, which inflates the value of income earned abroad and makes exports more profitable.

Analysts estimated that Toyota benefited from a decline in the yen against the dollar of 14 yen to around 132 yen for the period, which helped sales climb 20 percent to 4.02 trillion yen.

At the net level, a massive extraordinary gain from shifting its control of pension funds to the government enabled Toyota to record a 117 percent rise in profit to 352.37 billion yen.

That worked out at 100.80 yen per share, compared with 44.64 yen per share a year earlier.

ANOTHER YEAR OF RECORD PROFITS SEEN

Unlike most other Japanese companies, Toyota does not give full-year forecasts but executives said they are aiming to surpass last year's record earnings, when the automaker posted a 29 percent leap in operating profit to 1.12 trillion yen.

The world's third largest carmaker also lifted its forecast for group global vehicle sales for the full year to 6.11 million units, up from a forecast in May of 5.98 million.

Even though a recent surge in the yen has analysts forecasting a slowdown in earnings growth in later quarters, they still expect Toyota to beat last year's results.

"Naturally, they are going to beat last year. They are having such a strong performance in the United States," said auto analyst Noriyuki Matsushima at Nikko Salomon Smith Barney.

Toyota said healthy sales of new vehicles like its remodelled Camry, the Corolla and the Matrix had pushed up U.S. units sales 21 percent, with analysts also noting a large contribution from its luxury Lexus cars -- which are exported from Japan.

JAPAN WEAK

Suzuki also said the Corolla had done its bit to push up sales in other regions, with European vehicle sales up 15 percent and its Asia and other countries category up 55 percent.

Japan was its weakest segment, with vehicle sales down 8.2 percent, although the company managed to increase profit in the division due to cost reduction efforts.

The earnings figures were released after the stock market closed. Toyota shares rose 4.44 percent to 2,940 yen, compared with a 3.51 percent rise in the key Nikkei average (^N225 - News).

The yen was trading just below 121 yen on Wednesday although it has surged against the dollar since April to trade as high as 115.50 yen.

Caution over how long U.S. consumers, wooed by low-interest and other sales incentive campaigns, can keep up their love affair with new vehicles has some made analysts and fund managers cautious about Toyota's longer-term prospects.

"The numbers are quite impressive but the first quarter is over and looking ahead I think the outlook is not so rosy for Toyota and Japan's other major automakers," said Akio Yoshino, general manager at SG Yamaichi Asset Management.

With more pension funds in Japan moving to passive fund management which require a broader portfolio of shares, core stocks such as Toyota may face further downward pressure, said Yoshino, who does not intend to raise his holdings in the firm.

Toyota also published its results for the last business year under U.S. accounting rules which showed it posted a 12.2 percent drop in pretax profit and 17.5 percent slide in net income.

That's a stark contrast to a 15 percent rise in recurring profit and 31 percent jump in net profit under Japanese rules.

While declining to comment specifically on the numbers until formal filing was finished in the United States, a Toyota spokesman noted that under U.S. accounting rules, some 100 less subsidiaries were consolidated on its books.

Additional reporting by David McMahon and Chang-Ran Kim of Reuteurs