Toyota registers record profits but remains very prudent
For the 2017-2018 fiscal year (ending 31st of March) Toyota has scored a record 19,1 billion euro profit (+ 36%) and a raise in operational margin from 7,2 to 8,2%. Nevertheless CEO Akio Toyoda stays very prudent about the future.
During that same year Toyota sold 8,964 million cars (0,01% less than the preceding year) but that doesn’t bother the manufacturer at all, claiming for years already that volume isn’t important but that operational margin is.
Apparently Toyota hasn’t the ambition anymore to compete with the ’10 million groups’ like Volkswagen and the Alliance (Nissan/Renault/Mitsubishi), but with 9 million cars per year it’s big enough to have the benefits from large numbers both in development and production costs.
To be a little more specific, sales went up in Europa (+ 4,6%) but that’s still a fairly small market for Toyota so the total sales are more influenced by the small regress in Japan (-0,8%) and in the States (-1%), Toyota’s two biggest markets.
Concerning the operational margin, Toyota has well controlled costs and investments, but 8,2% is still below the 10% recorded a few years ago, and Akio Toyoda is even more prudent looking forward. He predicts a further small regress in sales for the next year (-0,15%) but also in turnover (-1,3%) and operational margin (down from 8,2 to 7,9%). This is still very good by general standards for the industry.
The reason for Toyoda’s carefulness is the “serious transformation the car sector is experiencing”. According to Toyota a transformation like we see now is only happening once in a century and it asks for heavy investments, which put pressure on the margins.
“We will expand our investments in autonomous and connected vehicles and develop electrical propulsion faster”, Toyoda added. Quite a statement because Toyota until now has primarily invested in hybrid propulsion and is also looking into hydrogen/fuel cell cars, but the pressure of the Chinese market for pure electric ones becomes too important.