Toyota Doubles 2021 Operating Profit Forecast As China Demand Rebounds

Japan's Toyota Motor Corp TM reported a fall in revenue and operating profit in the semi-annual earnings report for six months ending September. Still, it hiked the full-year 2021 operating profit guidance as demand from China recovered faster than anticipated.

Key H1 Highlights: The world's largest automaker by volume reported a 25.9% year-over-year decline in revenue to JP 11.38 trillion (approximately $109.94 billion) for H1 2020 and a 62.4% YoY fall in operating profit to JPY 519.9 billion (roughly $5.02 billion).

The operating margin for the period contracted by 450 basis points YoY to 4.6% due to higher marketing expenses and adverse effects of foreign exchange rates.

Net income fell 45.3% YoY to JPY 629.3 billion (approximately $6.08 billion) and the net margin contracted by 200 basis points to 5.5%. Toyota's diluted EPS for H1 was JPY 403.51 ($3.90).

Total retail vehicle sales for H1 fell 20% YoY to 4.37 million units, of which Toyota and Lexus vehicle sales accounted for 4.01 million units. Sales in the Asia region had dropped the most, falling 46.1% YoY to 0.46 million units.

Outlook: Toyota is bumping up the annual 2021 retail vehicle sales forecast by 3.5% to 9.42 million units as it sees improved demand in Japan, China, and Europe. The hiked consolidated Toyota vehicle sales forecast of 7.5 million units for FY2021 is still 16.2% lower than 8.96 million units sold in FY2020.

The company sees operational improvements and rising demand and has more than doubled its FY2021 operating income forecast to JPY 1.3 trillion (approximately $12.56 billion), from an earlier estimate of JPY 500 billion (about 4.8 billion).