Toyota’s Yen-Inspired Momentum May Hit Headwinds Next Year

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Source: Toyota

On a positive note, Toyota (NYSE:TM) was able to surpass its 10 million vehicle goal for the first time in history while full-year profit rose almost 90 percent, the company reported on Thursday. However, shares are being weighed down by conservative guidance for the year ahead, as momentum from the weakened state of the yen is set to wear off.

The January-to-March quarter was marred by the $1.2 billion settlement paid to the Department of Justice, and as a result, fourth-quarter profits dropped to 297 billion yen ($2.9 billion) from 314 billion a year earlier. Cost-reduction efforts managed to save 290 billion yen, and Toyota spent about 180 billion yen on marketing efforts during the year.

“The tailwind is over,” Tatsuo Yoshida, an automotive analyst at Barclays, told Bloomberg by phone prior to Toyota’s release of its results. “Unlike in a usual year, we cannot assume flat sales or even growth in Japan because of the hangover from last fiscal year.”

The company is projecting that it will “only” sell 9.1 million consolidated units for the next fiscal year and predicts consolidated net revenue of 25.7 trillion yen, with operating income of 2.3 trillion yen and net income of 1.78 trillion yen for the fiscal year that ends March 31, 2015. Toyota is assuming an exchange rate of 100 yen to the dollar.

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