Thanks to Yen Weakness, Toyota Achieves Record Quarterly Sales... Stock Price Plummets 8%

Japan's Toyota Motor Corporation recorded its highest-ever quarterly sales. This was driven by the weak yen effect and growth in hybrid vehicle sales. However, Toyota's stock price plunged 8% on the Tokyo Stock Exchange.

[Image source=AP Yonhap News]

According to Toyota's consolidated results for the second quarter (April to June) released on the 1st (local time), sales increased 12% year-on-year to 11.8378 trillion yen, and net profit rose 2% to 1.3333 trillion yen. These are record highs for a quarter. Operating profit for the same period was 1.3084 trillion yen, up 17% year-on-year. This also set a record high for the second quarter. However, it fell short of the market forecast of 1.3885 trillion yen.

Looking at the quarterly results, despite a decrease in production volume in Japan due to the earlier quality certification scandal, the weak yen effect was clearly confirmed. The Nihon Keizai Shimbun reported that the profit increase effect due to the weak yen was about 370 billion yen. The average exchange rate during this period was about 156 yen per dollar, about 10 yen weaker than the full-year rate of 145 yen. From a cost improvement perspective, it contributed about 95 billion yen, offsetting rising labor costs due to wage increases and rising raw material costs.

Additionally, strong sales of hybrid vehicles, considered one of Toyota's strengths, especially in the North American region, also contributed to the growth in performance. Toyota's operating profit margin was 11%, far exceeding Tesla's 6%.

However, concerns for the future have also been pointed out. In addition to the quality certification fraud revealed in June, further cases were discovered just over a month later. With the shift in monetary policies in the US and Japan narrowing the interest rate gap between the two countries, it is difficult to expect the weak yen effect to continue as before. The Nihon Keizai Shimbun stated, "Although Toyota is doing well, there are many concerns," and added, "The future is uncertain."

The previous day, Japan's Ministry of Land, Infrastructure, Transport and Tourism discovered additional quality certification fraud in seven Toyota models, ordered a halt to shipments of these vehicles, and issued a corrective order demanding fundamental organizational reforms from the company. As intentional concealment has been alleged regarding the successive frauds, corporate credibility is also being shaken. On the same day, the Bank of Japan (BOJ) raised interest rates to 0.25%, pushing the dollar-yen exchange rate down to around 149 yen, indicating a rise in the yen's value.

On this day, Toyota's stock price on the Tokyo Stock Exchange closed at 2,699 yen per share, down 8.48% from the previous session.

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