TOKYO — Toyota Motor refuses to be tempted away from its low-risk growth strategy, even as the world’s best-selling car maker met its midterm profit goals in the year ended March, and foresees even higher earnings this fiscal year.
The company has exceeded the target president Akio Toyoda set two years ago: to make ¥1-trillion in annual operating profit, and do so with a 5% margin. Its manufacturing arm in Japan also made a profit for the first time in five years, a symbolic triumph for a titan of Japanese industry.
This year, the company would concentrate on sharpening productivity in order to become more competitive, Mr Toyoda said.
Mindful of lessons learned from huge losses run up in 2008 after a period of boom and rapid expansion, it sees high profit as no reason to launch into a building programme — even as some rivals do exactly that.
"The wind that was blowing against us is calming down and we can hear some saying it is the time for us to take the offensive. But I think we are just standing at the start line of sustainable growth," the grandson of the founder of Toyota’s automotive business told reporters on Wednesday.
Toyota expects to make operating profit of ¥1.8-trillion in the year to end-March 2014, which would be below its peak of ¥2.3-trillion in the year ended March 2008
Powering that will be another year of record group sales in calendar year 2013, the company believes, reaching 9.91-million vehicles. It could become the first car maker in history to sell more than 10-million vehicles in a year.
Since Mr Toyoda took the helm in 2009, when profit margins were thin, the car maker has focused on cutting costs and improving profitability.
Evidence of Mr Toyoda’s caution is his fresh policy to build no new factories for the next three years, a sharp contrast with Honda Motor, which is rapidly adding to its production power around the world.
"Expansion of volume does not equate to growth. The driving force of sustainable growth comes down to making ever better cars," Mr Toyoda said.
Pillar of Japanese industry
Toyota on Wednesday posted an annual operating profit of ¥1.32-trillion with an operating margin of about 6%, beating a market that had expected ¥1.26-trillion profit, according to Thomson Reuters StarMine’s SmartEstimates.
It said it expected to sell 2.2-million vehicles in the US in 2013, up from about 2.1-million in 2012. The company is expected to release the Corolla compact car in the US this year.
"While the fierce competitive landscape (in the US) will likely mean that Toyota may see growth taper off in the short term, new product launches later this year should help to give sales a boost," Kelley Blue Book senior analyst Alec Gutierrez said.
In Japan, where automotive-related jobs account for 8.7% of the workforce, according to the Japan Automobile Manufacturers Association, it is becoming more profitable to make and export goods as a result of a yen that has weakened by about 15% against the dollar since January.
Mr Toyoda repeated his vow to continue making 3-million vehicles a year in Japan. The company exports 60% of its Japan-made vehicles.
Despite building no new plants, Toyota — which has an annual production capacity of about 9-million vehicles — will still be able to make more cars.
It will stick with its pre-existing plans to build new factories, such as in Thailand and Indonesia, and will also add capacity at plants already running, for example at its Kentucky plant in the US.
After recovering from a damaging safety recall in 2010 and a huge earthquake in 2011 in Japan that disrupted supply chains, Toyota booked record group-wide sales of 9.7-million vehicles in 2012, beating General Motors and Volkswagen.
Shares in Toyota have risen 37% since the beginning of 2013, outperforming the Nikkei index that has rose about 34% in the same period.
Toyota released its results after the close of trade on Wednesday.
On Wednesday, Fuji Heavy Industries, which makes Subaru cars, booked record annual operating profit of ¥120bn for the year ended in March, more than double last year’s figure.
The company also announced a plan to spend $400m on expanding capacity in the US, its biggest market.