Toyota, which on Tuesday reported record first-quarter net profit for the third consecutive year, enjoyed rising China sales but price wars were sapping profit, company officials said at an earnings briefing.
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For April-June, Toyota said net profit rose 10 per cent to 646.4 billion yen ($5.21-billion), beating the 607.5 billion yen average estimate of 11 analysts polled by Thomson Reuters.
“Favourable foreign exchange rates and cost reduction efforts were (the) main positive factors, while decreased vehicle sales and increased expenses…were negative factors”, Toyota Managing Officer Tetsuya Otake said in a statement.
The Japanese giant’s vehicle sales, however, were slightly lower in the period and it trimmed its 2015 calendar year sales forecast to 10.12 million vehicles from 10.15 million units.
While Volkswagen may have surpassed Toyota by sales during the first half, the Japanese carmaker still leads the industry in profits.
Japanese vehicle makers have benefited from a steep slide in the yen, which has made them more competitive overseas and inflated the value of repatriated overseas profits. Sales in Japan fell and Europe was flat. It booked an annualized 20% jump in sales, while deliveries in July were up 23.7%, but moderating Chinese economic growth and saturation of the Chinese auto market are expected to make “our business in China quite difficult”, said Mr. Otake.
Toyota has lifted the three-year freeze on new factories.
Still, the company continued to show strong results in China.
Toyota is working to recover its reputation for safety after the recall of millions of cars globally for various problems, including the problems at embattled supplier Takata.
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Its defective airbags have been blamed for eight deaths and scores of injuries around the world.
