豐田汽車 (TM) 2013 Q1 法說會逐字稿

Hello, everyone. Welcome to the financial results conference call for the fiscal year 2013 first quarter. I am [Tomaschko Deguchi] from the Accounting Division of Toyota Motor Corporation.

Today, we have Mr. Takahiko Ijichi, Senior Managing Officer in charge of the Accounting Group of Toyota Motor Corporation.

The agenda of today's conference call is the following. First, Mr. Ijichi will briefly discuss the highlights of Toyota's earning results. And then, the rest of the presentation will be read out. This will take about 10 minutes. After the presentation, you are welcome to ask questions. We expect the entire call to take about 60 minutes.

Please note that the presentation contains forward-looking statements that reflect our plans and expectations, and our actual results may be materially different from these statements.

Our complete cautionary statement concerning forward-looking statements is included on page 2 of today's presentation material and a complete cautionary statement concerning insider trading is included on page 3. Both of the statements can be downloaded from our Internet home pages.

Now, I would like to turn the call over to Mr. Ijichi.

(Interpreted) Good morning and good afternoon, everyone. My name is Ijichi. Thank you very much for joining us, despite your occupied schedules, for this conference call.

The operating income for the first quarter of the fiscal year ending in March 2013 increased JPY461.1 billion compared with the same period of previous year, thanks to the improvement or recovery from the earthquake and floods in Thailand, as well as profit improvement activities that the entire Company has been striving thus far. And thus, the financial results have been very good.

However, it is not certain whether we can continue to sustain the same profit level continuously in and after the second quarter because during the first quarter, the spending of fixed expenses remained pretty low and because the eco-car subsidies in Japan is expected to end before long.

Furthermore, in addition to the increase in sales volume, we'll continue to implement profit improvement activities, such as trying to improve gross profit per vehicle, as well as trying to curb fixed expenses.

Given the impact of FX fluctuations, especially of the euro to dampen profit, and given the risks of market environment deterioration triggered by the credit crisis in Europe, the full-year forecast of operating income is going to be kept at JPY1 trillion, the same level that we announced previously.

And those details will be explained in the presentation, which is going to be read out by the interpreter.

So from here on, I would like to discuss Toyota's financial results for the three months to June 2012; and please look at slide 5.

Our consolidated vehicle sales for the first quarter of this fiscal year increased by 1,048,000 units to 2,269,000 units compared to the same period last year.

In all regions, vehicle sales increased significantly due to strong recovery of demand, which had suffered from the lack of supply caused by the Great Eastern Japan earthquake last year.

Especially in Japan, a market stimulated by eco-car subsidies, sales were further boosted by the popularity of our product lineups, particularly the hybrid products such the Prius and Aqua that benefited from eco-car subsidies.

As summarized in slide number 6, our consolidated financial performance for the first quarter resulted in net revenues of JPY5,501.5 billion; operating income of JPY353.1 billion; pre-tax profit of JPY415.2 billion; and net income of JPY290.3 billion.

Next, with slide 7, I would like to explain the major factors impacting net income year on year. Net income for the first quarter was JPY290.3 billion, up JPY289.1 billion compared to the same period last fiscal year. The left side of the slide shows the major factors which impacted operating income.

Despite the yen's appreciation, operating income increased substantially thanks to increased vehicle sales and cost reduction efforts, including our Company-wide VA activities.

Let me now explain operating income by region, and please look at slide 8 for that.

Practically all regions posted increasing operating income, as vehicle sales recovered strongly from the impact of the Japan earthquake in the first quarter last year.

Furthermore, thanks to a high level of vehicle production and sales, all regions resulted in profitability. In Japan, operating income improved dramatically, despite yen's appreciation, as a result of increased vehicle production and sales, as well as our efforts for cost reduction.

In North America, operating income also improved, thanks to increased vehicle sales, in spite of declined contribution from the Financial Services.

In Asia, operating income reached a new record level of JPY101.5 billion over the last quarter, which mainly resulted from the increased sales of IMVs, supported by solid growth of demand in each country.

Next, please look at slide 9 on Financial Services. Operating income for Financial Services, excluding swap valuation gains and losses, decreased by JPY26.7 billion to JPY70.1 billion year on year. This was mainly due to reduced reversal of provisions for loan and residual losses in comparison to the same period last year. However, we maintained a high level of earnings on the basis of increased lending balance.

Let me move on to slide number 10. Equity in earnings of affiliated companies was JPY71.3 billion for the first quarter. This represented a JPY31.1 billion over the same period last year, thanks mainly to the earnings recovery of our affiliated companies in Japan.

Now I would like to discuss our outlook for the current fiscal year, which will end in March 2013. Please look at slide 12.

With regard to our consolidated vehicle sales for the current fiscal year, we revised our expectation from our May forecast of 8.7 million units to 8.8 million units in consideration of our latest sales, especially in Japan and North America.

In Japan, we would like to enhance our sales through launches of attractive new models, while minimizing the anticipated fall in demand after the expiry of the eco-car subsidies.

Outside Japan, we plan to promote vehicle sales by actively delivering locally produced models in North America and the emerging markets, among others, while closely assessing our market environments, including a potential impact of economic slowdown under the influence of the eurozone crisis.

Please look at slide 13. We revise our assumption of the foreign exchange rate to JPY80 to $1 and JPY100 to EUR1 from July onwards On a full-year basis, this implies the yen's further appreciation by JPY4 to EUR1.

Based on this revised currency assumption, our forecasts of consolidated financial performance for the current fiscal year remain the same as our previous forecasts, namely net revenues of JPY22 trillion; operating income of JPY1 trillion; pre-tax income of JPY1,160 billion; and net income of JPY760 billion.

Now please look at slide 14 for further analysis of our latest operating income forecast in comparison to our May forecast.

Although we expect further marketing efforts and further cost reduction efforts in collaboration with our suppliers, we maintain our operating income forecast of JPY1 trillion. This is because we assume negative ForEx impact, mainly resulting from weakness of the euro and the risk of deterioration of market environments.

We also maintain our previous forecasts of CapEx, depreciation expenses and R&D expenses as indicated in the footnotes.

This concludes my presentation on our first quarter results.

For your information, there is an extra slide attached to our presentation, to clarify our definitions of consolidated vehicle sales and retail vehicle sales. I hope this will be helpful as a reference. Thank you very much for your attention.

Portions of this transcript that are marked (interpreted) were spoken by an interpreter present on the live call. The interpreter was provided by the Company sponsoring this Event.