Toyota expected a tough 2024, but while Q2 performance has suffered, the company’s full-year outlook remains virtually unchanged. By Jonathan Storey
Toyota reported a 20% drop in operating profit for its fiscal second-quarter, bringing to an end six consecutive quarters of growth but meeting consensus expectations as the impact of tougher market conditions and non-recurring items was only partly offset by the contributions from favourable forex and cost reduction efforts.
Toyota Q2 & full-year 24/25 (% change y-o-y)
Group revenue was marginally (0.1%) higher at ¥11,445bn, reflecting a small decline in the automotive division offset by a significant rise in the contribution from financial services.
Operating profit fell 19.6% to ¥1,156bn and the margin dropped 2.5pts to a still-respectable 10.5%, ending six successive quarters of margin growth. The ¥282.6bn net decrease in operating profit reflected:
- ¥240.0bn – exchange rates;
- ¥35.0bn – net cost reductions as ¥80bn in efficiency gains was partly offset by ¥45bn in higher material prices;
- ¥(15.0)bn – R&D expense;
- ¥(15.0)bn – depreciation;
- ¥(85.0)bn – personnel expenses;
- ¥(90.0)bn – volume and model mix;
- ¥(230.0)bn – Hino certification costs (Hino reported a record net loss for the period citing settlement fees to US authorities and plaintiffs in lawsuits in Canada in connection with its test data falsification scandal);
- ¥(122.6)bn – other.
Toyota operating margin (%)
The profit contribution from the automotive division was down 27% at ¥950bn, a margin of 9.2% (year-ago 12.4%). The finance division contributed ¥172.8bn, up 77%.
On a regional basis, operating profit in Japan fell 28% to ¥639bn, a margin of 12.4% (year-ago 16.4%). In North America operating profit was nearly 89% lower at ¥27.3bn, a margin of 0.6% (5.3%). In non-Japan Asia operating profit rose 7.9% to ¥242bn, a margin of 10.8% (9.6%) and in Europe profit was 9.5% lower at ¥99.7bn, taking the margin to 7.2% from 8.1% a year earlier.
Electric vehicles (EVs) accounted for 46% of Toyota’s global sales (year-ago 36%). Most of these (93%) were non-plug-in hybrids (PHEVs). Sales of battery EVs rose 16.5% to 35,000 units and sales of PHEVs rose 7.1% to 42,000 units.
| Toyota | Unit | H1-24/25 | Q2-24/25 | Q1-24/25 | Yr to Mar 24 | Q4-23/24 | |||||
| Group | Data | % | Data | % | Data | % | Data | % | Data | % | |
| Revenue | ¥ bn | 23,282.5 | 5.9 | 11,444.6 | 0.1 | 11,837.9 | 12.2 | 45,095.3 | 21.4 | 11,072.6 | 14.3 |
| Operating profit | ¥ bn | 2,464.2 | (3.7) | 1,155.8 | (19.6) | 1,308.5 | 16.7 | 5,352.9 | 96.4 | 1,112.7 | 77.5 |
| Pre-tax profit | ¥ bn | 2,732.1 | (22.4) | 859.8 | (52.3) | 1,872.3 | 8.8 | 6,965.1 | 89.8 | 1,608.0 | 101.1 |
| Net profit | ¥ bn | 1,865.7 | (29.5) | 501.8 | (62.0) | 1,363.8 | 2.8 | 5,071.4 | 103.4 | 1,039.8 | 96.6 |
| Employees | 000’s | 384.2 | 0.7 | 384.2 | 0.7 | 385.0 | 1.4 | 380.8 | 2.1 | 380.8 | 2.1 |
| Unit sales | 000’s | 4,556 | (4.0) | 2,304 | (4.7) | 2,252 | (3.2) | 9,443 | 7.0 | 2,148 | (7.9) |
| Japan | 000’s | 938 | (12.5) | 517 | (4.3) | 421 | (20.9) | 1,993 | (3.7) | 363 | (45.7) |
| N. America | 000’s | 1,348 | (2.7) | 643 | (8.5) | 705 | 3.4 | 2,816 | 17.0 | 655 | 18.0 |
| Europe | 000’s | 547 | (1.6) | 256 | (5.2) | 291 | 1.7 | 1,192 | 15.7 | 309 | 12.8 |
| Asia | 000’s | 905 | 1.1 | 469 | (1.9) | 436 | 4.6 | 1,804 | 3.0 | 429 | (6.2) |
| Other | 000’s | 818 | (2.2) | 419 | (1.9) | 399 | (2.4) | 1,638 | 4.7 | 392 | 4.1 |
| Retail sales | 000’s | 5,373 | (4.0) | 2,737 | (3.8) | 2,636 | (4.2) | 11,090 | 5.0 | 2,526 | (5.4) |
| Per unit | |||||||||||
| Revenue | ¥ mil | 5.11 | 10.3 | 4.97 | 5.0 | 5.26 | 15.9 | 4.78 | 13.4 | 5.15 | 24.0 |
| Operating profit | ¥ mil | 0.54 | 0.3 | 0.50 | (15.7) | 0.58 | 21 | 0.57 | 83.5 | 0.52 | 92.6 |
| Pre-tax profit | ¥ mil | 0.60 | (19.2) | 0.37 | (49.9) | 0.83 | 12.4 | 0.74 | 77.4 | 0.75 | 118.3 |
| Net profit | ¥ mil | 0.41 | (26.6) | 0.22 | (60.1) | 0.61 | 6.2 | 0.54 | 90.1 | 0.48 | 113.4 |
| Per employee | |||||||||||
| Revenue | ¥ mil | 60.61 | 5.2 | 29.79 | (0.6) | 30.75 | 10.7 | 118.42 | 18.8 | 29.08 | 11.9 |
| Operating profit | ¥ mil | 6.41 | (4.4) | 3.01 | (20.2) | 3.40 | 15 | 14.06 | 92.3 | 2.92 | 73.8 |
| Pre-tax profit | ¥ mil | 7.11 | (22.9) | 2.24 | (52.6) | 4.86 | 7.3 | 18.29 | 85.9 | 4.22 | 96.9 |
| Net profit | ¥ mil | 4.86 | (30.0) | 1.31 | (62.3) | 3.54 | 1.4 | 13.32 | 99.2 | 2.73 | 92.5 |
| Sales | units | 11.9 | (4.6) | 6.0 | (5.4) | 5.9 | (4.5) | 24.8 | 4.8 | 5.6 | (9.8) |
| Return on revenue | |||||||||||
| Operating profit | % | 10.6 | (1.1) | 10.1 | (2.5) | 11.1 | 0.4 | 11.9 | 4.5 | 10.0 | 3.6 |
| Pre-tax profit | % | 11.7 | (4.3) | 7.5 | (8.2) | 15.8 | (0.5) | 15.4 | 5.6 | 14.5 | 6.3 |
| Net profit | % | 8.0 | (4.0) | 4.4 | (7.2) | 11.5 | (1.1) | 11.2 | 4.5 | 9.4 | 3.9 |
| Revenue by division | |||||||||||
| Automotive | ¥ bn | 21,092.2 | 4.6 | 10,332.5 | (1.4) | 10,759.7 | 11.1 | 41,266.2 | 22.0 | 10,035.3 | 13.8 |
| Finance | ¥ bn | 2,043.0 | 26.0 | 1,037.7 | 22.6 | 1,005.3 | 29.7 | 3,484.1 | 24.0 | 940.6 | 32.2 |
| Other & intra-co. | ¥ bn | 147.3 | (24.5) | 74.5 | (33.2) | 72.8 | (13.0) | 344.9 | (34.3) | 96.8 | (39.1) |
| Op. profit by division | |||||||||||
| Automotive | ¥ bn | 2,067.8 | (8.0) | 949.9 | (27.0) | 1,117.9 | 18.2 | 4,621.4 | 111.9 | 901.6 | 96.5 |
| Finance | ¥ bn | 332.5 | 35.8 | 172.8 | 77.0 | 159.7 | 8.5 | 570.0 | 30.3 | 153.2 | 34.8 |
| Other & intra-co. | ¥ bn | 64.0 | – | 33.2 | – | 30.8 | – | 161.4 | – | 58.0 | – |
Outlook
The company began the year expecting it to be tough and while the Q2 results were a little worse than anticipated, it kept its full-year outlook virtually unchanged with:
- revenue expected to be 2.0% higher at ¥46,000bn;
- operating profit expected to be 20% lower at ¥4,300bn;
- operating margin expected to be 2.6pts lower at 9.3%;
- net profit expected to be 28% lower at ¥3,570bn.
Globally, consolidated sales are now anticipated to dip by 0.5% compared with a prior forecast of a 0.6% increase.
Given the H1 profit decline of 3.7%, the full-year forecast implies a 34% fall in profit over the remaining six months of the year. The forecast assumes a rate of ¥145 per dollar and ¥160 per euro, but for the past month or so it has been trading more weakly against both currencies. If this continues the forecast could prove to be on the conservative side.
