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

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Toyota Motor

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.
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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 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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