Toyota Motor (TM 105.94, -2.52) reported better than expected results for its fiscal fourth quarter, but cautious guidance for fiscal year 2018 has weighed on the stock, which is down 2.3%.
The automaker reported above-consensus fourth quarter earnings of JPY133.16 per share on a 6.8% year-over-year increase in revenue to JPY7.44 trillion, which also exceeded estimates. For the full year, Toyota's revenue declined 2.8% year-over-year to JPY27.60 trillion.
Consolidated vehicle sales for the full year increased by 290,000 to 8.97 million. The strongest growth was recorded in Japan (+215,000) and rest of Asia (+243,000) while European sales increased by 81,000, and North American sales were little changed, increasing by 2,000. Sales in Central and South America, Oceania, Africa, and the Middle East declined by 247,000.
Toyota's operating income fell 30.1% year-over-year to JPY1.99 trillion with negative currency translations responsible for the bulk of the drop. The decline was offset in part by benefits from cost reductions and marketing efforts.
Operating income in Japan fell 28.1% to JPY1.21 trillion, as the effect of currency translations and an increase in expenses offset cost reduction efforts and an increase in unit sales to 2,274,000 from 2,059,000 one year ago.
North American operating income fell 34.6% to JPY330.9 billion, as increased marketing expenses outweighed cost reduction efforts. Unit sales decreased to 2,837,000 from 2,839,000 one year ago.
The European unit swung to an operating loss of JPY11.80 billion after recording an operating income of JPY75.70 billion one year ago. Higher expenses and the depreciation of local currencies led to the decline while unit sales increased to 925,000 from 844,000.
Operating income in Asia fell 6.7% year-over-year to JPY424.40 billion due to negative currency translations and decreased exports to the Middle East. Vehicle sales increased to 1,588,000 units from 1,345,000 one year ago.
Central & South America, Oceania, Africa, and the Middle East operating income fell 38.7% to JPY63.40 billion due to increased expenses and negative currency translations. Marketing efforts provided a small benefit, but vehicle sales declined to 1,347,000 from 1,594,000 one year ago.
Operating income in Toyota's Financial Services arm declined 24.6% to JPY240.40 billion. Growth in lending balance was offset by increased costs related to residual value losses due to falling used car prices in North America.
Looking ahead, the automaker expects that revenue for fiscal 2018 will decline 0.4% year-over-year to JPY27.50 trillion, which is below market expectations. Vehicle sales are expected to tick down by 1,000 to 10.25 million units.