Kenta Kon-led Toyota on Thursday lifted its annual outlook, with robust sales of hybrid vehicles helping the Japanese automobile giant defy an industry downtrend.
Apart from announcing its revised annual outlook, Toyota also informed the media about undertaking an USD 89 billion plan to boost shareholder returns.
After the announcements, shares in the world’s largest automaker finished up 17% for the day, marking their biggest one-day gain in almost 40 years. This increase followed an advance as investors purchased blue chips after selling AI-related shares in the wake of the US midterm elections.
“It was a decent quarter. There are some automakers so far that have been reporting that had terrible quarters,” said Christopher Richter, autos analyst at CITIC Securities Japan.
“The fact that they guided upwards and then they had all the shareholder payout stuff, it’s like, wow,” he told Reuters.
Toyota’s plan to return shareholders as much as 14 trillion yen (USD 89 billion) by March 2031 compares with seven trillion yen in the preceding five years and follows years of corporate governance reforms by Japanese authorities.
The Japanese giant’s massive cash pile, which currently sits at around 9.5 trillion yen, has long been a source of frustration for shareholders, Richter said, adding the automaker will need to continue to return more capital to investors to bolster its return on equity.
Also benefiting from a weaker yen and lower US tariffs that helped offset a slide in sales in China, Toyota said it now expects operating profit of 3.9 trillion yen (USD 24.6 billion) for the year ending March, up 15% from an earlier forecast.
The automaker also posted a forecast-beating 34% climb in operating income for the July-September quarter.
Toyota has benefited from its focus on petrol-electric hybrids as fuel costs have surged in the wake of the Iran war, even as it faces considerable headwinds in the form of competition from Chinese EV companies.
Unlike other traditional car companies that heavily invested in electric vehicles and subsequently had to write down billions of dollars due to declining demand, Toyota has primarily concentrated on advancing the hybrid technology it popularised with the Prius decades ago.
The strategy has been key to its ability to defend market share in its main market, the United States, despite Chinese players threatening its business prospects elsewhere, especially in Europe and Southeast Asia.
“While higher fuel prices were hitting consumer sentiment in the highly competitive Chinese market, Toyota was now fighting back,” Chief Financial Officer Yoichi Miyazaki told a briefing.
“We’ve been able to halt the decline in our market share and are now starting to regain some ground,” he said.
Toyota said it would establish its robotics business, which would provide robots for manufacturers and other industries, positioning the business as a pillar of future growth.
Toyota plans to spend at least 22 trillion yen on R&D and capital investment through fiscal 2030 and more than halve net liquid assets to seven trillion yen by March 2031 from end-March levels, Miyazaki told the shareholders and analysts.
Takanori Azuma, Toyota’s chief accounting officer, said the company was offsetting the impact of the volatile geopolitics in the Middle East and a surge in material prices through sales efforts and cost reductions.