Key Takeaways From Toyota Motors’ Q3 2018 Results

Toyota Motors (NYSE:TM) announced its Q3 2018 results on February 6^th 2018 and the company reported a nearly 7.5% increase in consolidated net revenues and a 270 basis points increase in operating margin. The increase in operating margin was primarily due to favorable foreign exchange rates.

Below is a summary of the company’s performance in Q3 2018:

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Going Forward:

• For the fiscal year 2017-2018 Toyota Motors expects total retail sales of 10,300K (50k greater than its earlier estimate).
• The company expects a revenue growth of 5% (year on year) in fiscal year 2018 and the operating margin to be around 7.6%, 400 basis points higher than the 7.2% for the previous fiscal year. The operating margin guidance has been revised from 7% to 7.6% due to favorable foreign exchange rates and a projected decrease in expenses.
• In order to build a competitive edge, Toyota Motors is accelerating its initiatives in the mobility segment and recently entered into a collaboration with Panasonic in the field of next generation batteries. The company is also aiming to “cultivate tough professional manufacturing groups” who can handle changes in the automotive landscape. Toyota Motors is working on several improvements in its manufacturing process which can reduce costs and build a competitive edge.

Q3 2018 has been a positive quarter for Toyota Motors, primarily due to the positive effect of foreign exchange rates leading to a higher operating income. The company has revised its further guidance for this fiscal year upwards and we will be updating our model for the company based on this guidance. This update can lead to a change in our price estimate for the company.

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