Toyota Ends FY 2019 With Positive Revenue Growth, Will It Sustain The Same in FY 2020?

by Trefis Team
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Toyota Motor Corporation (NYSE: TM), the Japanese Auto giant, announced its Q4 2019 (ended March 2019) and FY 2019 results on May 8, 2019, followed by a conference call with analysts. For the year, the company posted revenue in line with consensus at $272.3 billion, up by 2.9% y-o-y. The increase was driven largely by an increase in sales volume, particularly in Asia-Pacific and Europe. The earnings missed consensus and were recorded at $11.62, lower than the $14.74 per share in FY 2018.

 

Toyota Motors reported $272.3 billion in Total Revenues in Fiscal year 2018. This included 2 revenue streams:

  • Automotive Revenue: $253.2 billion in FY 2018 (93% of Total Revenues). This includes revenue from vehicles sold and other ancillary revenue from the automotive business.
  • Financial Services: $19.1 billion in FY 2018 (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 4 quarters (y-o-y). In Q4 2019 (ended March 2019) the revenue was recorded at $69.8 billion, up by 0.3% y-o-y.
  • Trefis estimates FY 2020 Total Revenue to be about 6.5% higher than the previous year at about $290.1 billion.

 

Trend in Expenses:

  • Total Expenses have moved mostly in line with Revenue except it shot up last quarter (Q3 2019) due to $4.5 billion loss on equity securities. Cost of Products has remained steady at around 77% of Total Revenue. In Q4 2019 (ended March 2019) it increased slightly to 78.4% of Total Revenue.
  • Indirect expenses in FY 2019 went up to $53.3 billion mainly due to the loss on equity securities mentioned above. In FY 2020 we expect indirect expenses to be around $51.8 billion.

Full Year Outlook:

  • For the full year, we expect gross revenue to increase by 6.5% to $290.1 billion in FY 2020.
  • 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 4 quarters even when the global auto market is slowing down. We expect the company to continue the positive growth in FY 2020.

 

 

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