Toyota Unaffected by Semiconductor Shortage Impact

[Asia Economy Reporter Minji Lee] Toyota is expected to increase sales without being significantly affected by the shortage of automotive semiconductors.

On the 16th, Toyota announced that for the fourth quarter (January to March), it recorded sales of 7.6 trillion yen and operating profit of 690 billion yen, an increase of 8.3% and 79.6% respectively compared to the same period last year. Net profit rose 1130% to 777 billion yen. In February, Toyota revealed that it had secured semiconductor inventory for up to four months, and it is analyzed that relatively fewer production disruptions compared to other companies positively influenced the strong performance.

Ja-il Lee, a researcher at Eugene Investment & Securities, said, "The impact of production disruptions caused by automotive semiconductors on performance was minimal," adding, "Pre-tax profit and net profit exceeded market expectations by 21% and 35%, respectively, due to improved profitability of the Chinese subsidiary and equity-method affiliates in Japan." Operating profit margin reached 9% due to improved sales mix and financial sector profitability.

The company set its global retail sales target for 2022 at 10.55 million units, close to the highest ever record of 10.6 million units. It is expected to recover to pre-COVID-19 levels through sales recovery in North America (18%) and Europe (15%). The sales guidance was also set near the highest ever, with sales of 30 trillion yen and operating profit of 2.5 trillion yen, representing increases of 10% and 14%, respectively.

Toyota is expected to be less affected by semiconductor production disruptions. Renesas resumed operations of automotive semiconductor production, which had been halted due to a fire at the end of April, and is expected to operate at 100% capacity by July. TSMC is expected to meet the minimum automotive semiconductor demand starting from the end of June.

Ja-il Lee of Eugene Investment & Securities said, "Although there are concerns about prolonged production disruptions, bottlenecks are gradually being resolved," adding, "The impact of production disruptions is more significant for second and third-ranked companies by region than for the number one company." Nissan recently reported 8.6% sales growth and set a low annual breakeven guidance.

Dividend attractiveness is also high. Toyota conducted share buybacks worth 550 billion yen in 2018 and 2019 but reduced the scale to 200 billion yen in 2020 and 250 billion yen in 2021 due to COVID-19. The researcher explained, "As uncertainties decrease, shareholder return policies can be expanded," adding, "On September 30 this year, a 5-for-1 stock split will be implemented, lowering the entry barrier for small shareholders."

This content was produced with the assistance of AI translation services.