Will Toyota Motors End FY 2019 With Positive Growth?

by Trefis Team
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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.

 

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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