Will Toyota Motors End FY 2019 With Positive Growth?

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TM: Toyota Motor logo
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Toyota Motor

Toyota Motor Corporation (NYSE: TM), the Japanese Auto giant, is set to announce its Q4 2019 (ended March 2019) results on May 8, 2019, followed by a conference call with analysts. The market expects the company to report revenue close to $272.5 billion for FY 2019 (ended March 2019), which would be an increase of 3% on a y-o-y basis. The increase is mainly expected from higher average revenue per vehicle and other automotive revenue. Market expectation is for the company to report earnings of $14.25 per share in Q4 2019 (ended March 2019), lower than $14.74 per share in the year-ago period.

 

Toyota Motors reported $264.7 billion in Total Revenues in Fiscal year 2018. This included 2 revenue streams:

  • Automotive Revenue: $247 billion in FY 2018 (93.3% of Total Revenues). This includes revenue from vehicles sold and other ancillary revenue from the automotive business.
  • Financial Services: $17.7 billion in FY 2018 (7.7% of Total Revenues). This includes revenue from the financial services provided for purchasing or leasing vehicles of the company.
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We have summarized our key expectations from the earnings announcement in our interactive dashboard – What Has Driven Toyota Motors’ Revenues & Expenses Over Recent Quarters, And What Can We Expect For Full-Year 2019? In addition, here is more Consumer Discretionary data.

 

Key Factors Affecting Earnings:

Revenue expected to grow:

  • Due to the global slowdown in the Auto industry, Toyota Motors has seen revenue fluctuate over the past quarters but has also seen positive growth in each of the first 3 quarters (y-o-y). We expect Q4 2019 (ended March 2019) to see a small growth over the same period in the previous year.
  • Trefis estimates FY 2019 Total Revenue to be about 5% higher than the previous year at about $278.3 billion.

 

Trend in Expenses:

  • Total Expenses have moved mostly in line with Revenue except it shot up last quarter (Q3 2019) due to a $4.5 billion loss on equity securities. Cost of Products has remained steady at around 77% of Total Revenue and is expected to remain the same in Q4 2019 (ended March 2019).
  • We expect the Net Income to remain in line with 2018 as Indirect expenses are expected to increase to $50.1 billion.

Full Year Outlook:

  • For the full year, we expect gross revenue to increase by 5% to $278.3 billion in FY 2019.
  • Gross margin is expected to remain in line at around 26%.

 

Trefis has a price estimate of $144 per share for Toyota Motors’ stock. The company has shown positive revenue growth (y-o-y) in the last 3 quarters even when the global auto market is slowing down, and we expect it to finish the year on a similar note.

 

 

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