Key Takeaways From Toyota Motors’ Q1 2018 Results

by Trefis Team
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Toyota Motors (NYSE:TM)announced its Q1 2018 (fiscal year ends in March 2018) results on August 4 2017, reporting a 7% increase in net revenues on a consolidated basis as vehicle sales grew by 43,000 units year on year. However, the company witnessed a nearly 10% decline in operating income due to currency fluctuations and increase in expenses. This is in line with the company’s guidance for 2017-2018 where it expected an 18% decline in operating income for this fiscal year.  However, sales during this quarter witnessed an increase and the company now expects a lower decline in operating income for the fiscal year.

Below is a summary of the company’s performance for Q1 2018:

From the above table it can be seen that the most significant decline in operating income was faced by the company in North America. This decline was primarily due to increased marketing expenses in the region. Japan had a strong quarter due to increased vehicle sales and cost reduction efforts.

Below is a summary of region and segment-wise revenues of the company:

Going Forward:

  • Toyota Motors expects consolidated vehicle sales for the fiscal year ending March 2018 to be around 8.9 million units and the operating income estimate has been revised upward by 250 billion yen.
  • The company is taking measures to avoid two consecutive years of earnings decline. It is shifting its R&D (research and development) resources to areas such as autonomous vehicle technology and new energy vehicles to adapt to the changing landscape of the automotive industry.
  • Toyota is also looking to review its current models to maximize vehicle sales and profitability and resolve the gap between supply and demand.
  • Innovative solutions such as automating routine tasks to bring about cost efficiencies and using smart phones to resolve problems between domestic and overseas plants on a real time basis are being worked upon.

Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Toyota Motor

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