豐田汽車 (TM) 2013 Q2 法說會逐字稿

Hello, everyone.

Welcome to the financial results conference call for the fiscal year 2013 second quarter.

I am [Tomosko Deguchi] from the Accounting Division of the Toyota Corporation.

Today we have Mr. Takahiko Ijichi, Senior Managing Officer in charge of the Accounting Group of Toyota Motor Corporation and Ms. [Yumiko Hayashi], an interpreter with us.

The agenda of today's conference call is the following.

First, Mr. Ijichi will briefly discuss the highlights of Toyota's earnings results and then [Ms.

Hayashi] will take over the rest of the presentation.

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.

A complete cautionary statement concerning forward-looking statements is included on page two of today's presentation material and a complete cautionary statement concerning insider trading is included on page three.

Both of the statements can be downloaded from our Internet homepages.

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

(interpreted) Good evening, everybody.

This is Ijichi speaking.

First of all, I would like to thank you very much for attending this conference call despite your very busy schedule.

First of all, let me give you the highlights of our financial results.

Our consolidated operating income for the first half of fiscal year ending March 2013 was JPY693.7 billion, which is an increase of JPY726.3 billion over the same period last year as a result of dramatic increase of sales volume from the reduced level last year caused by the supply disruption due to the great East Japan earthquake and also reflecting the result of our profit improvement activity.

As for our interim dividend, we are paying JPY30 per share, an increase of JPY10 per share over the previous year.

Although the market environment in China and Europe lacks transparency reflecting the progress in our profit improvement activity, we are revising upwards our forecast for the consolidated operating income by JPY50 billion.

Now I shall present the details of our financial results.

Please look at slide five.

Our consolidated vehicle sales for the first half of this fiscal year increased by 1.490 million units to 4.516 million units.

In all regions vehicle sales increased significantly for both the first half and the second quarter of this fiscal year, because we suffered from the supply disruption due to the great East Japan earthquake in the same period last year.

In Japan, the Echo car subsidies, among other factors, stimulated the market and the demand for a product lineup, particularly with hybrid vehicles, was strong.

This, together with the recovery from the last year's disrupted sales, contributed to a substantial improvement in vehicle sales.

In North America vehicle sales grew substantially year on year driven by new Camry, Corolla, RAV4, and so on against a backdrop of a solid new car market.

Further, in Asia, where we leveraged on the growth of major markets such as Thailand and Indonesia, vehicle sales marked a new record on both a half year and a quarterly basis.

As summarized in slide six, our consolidated financial performance for the first half year resulted in net revenues of JPY10.983 trillion, operating income of JPY693.7 billion, pretax income of JPY794.5 billion, and net income of JPY548.2 billion.

This represents an increase in both revenues and earnings by comparison to the same period last year.

Next, using slide seven I would like to explain the major factors which impacted net income year on year.

Net income for the first half was JPY548.2 billion, up JPY466.6 billion compared to the same period last year.

The left side of the slide shows the major factors which impacted operating income year on year.

Despite the yen's appreciation, operating income improved significantly due to the recovery in sales which dropped in the first half of last year and our companywide profit improvement activities.

As summarized in slide eight, our consolidated financial performance for the second quarter resulted in net revenues of JPY5.4067 trillion, operating income of JPY340.6 billion, pretax income of JPY379.3 billion, and net income of JPY257.9 billion.

For your information, slide nine summarizes the major factors which impacted the second quarter net income year on year.

Next, using slide 10, I would like to explain operating income for the first half-year by region.

In Japan operating income improved dramatically despite yen's appreciation thanks to increased vehicle production and sales, as well as our cost reduction efforts.

In North America, operating income improved as a result of increased vehicle production and sales in spite of decreased contribution from our financial services operations.

In Asia, operating income reached a new record level on a half-year basis.

For your information, slide 11 summarizes operating income for the second quarter by region.

Next, please see slide 12 for financial services.

Operating income, excluding swap valuation gains and losses, decreased by JPY15.5 billion to JPY147.8 billion for the first half-year.

This was mainly due to the high level of reversal of provisions for loan and residual losses in the United States in the first quarter of the last fiscal year.

For the second quarter, however, operating income grew year on year as a result of increased lending balance and so on.

Let me move on to slide 13, equity and earnings of affiliated companies for the first half year was JPY123.8 billion, up JPY44.3 billion year on year, mainly due to the strong earnings of our affiliated companies in Japan.

Please refer to slide 14.

Our unconsolidated financial performance for the first half-year resulted in net revenues of JPY4.8792 trillion, operating income of JPY67.7 billion, ordinary income of JPY405.5 billion, and net income of JPY316.8 billion.

Next I would like to discuss our interim dividends.

Please look at slide 15.

With regards to our interim dividend, we will pay JPY30 per share, an increase of JPY10 over last year.

We believe a dividend payment is the most important means of returning value to our shareholders.

While ensuring our long-term financial stability and considering our earnings prospects and investment requirements, we would like to meet our shareholders expectation better.

Now I would like to move on to discuss our outlook for the full fiscal year ending March 2013.

Please see slide 17.

In consideration of increased uncertainty over the market environments in China and Europe, we have revised our consolidated vehicle sales forecast to 8.75 million units, down 50,000 units from our previous forecast of 8.8 million units.

We intend to stimulate demand and achieve our sales target by actively implementing marketing measures, including new model launches, while closely monitoring the market conditions in each country.

Please look at slide 18.

We have revised our foreign exchange rate assumption to JPY78 to the $1 and JPY100 to the EUR1 from October onwards, thus adopting JPY79 to the $1 and JPY100 to the EUR1 on a full-year basis.

Based on this revised currency assumption, our forecast of consolidated financial performance for the current fiscal year are now net revenues of JPY21.3 trillion, operating income of JPY1.05 trillion, pretax income of JPY1.18 trillion, and net income of JPY780 billion.

Now please see slide 19 for the analysis of our latest operating income forecasts in comparison to our August forecast.

We upwardly revised our operating income forecast by JPY50 billion to JPY1.05 trillion.

This is because of the progress made in our profit improvement activities in spite of the negative currency impact and the uncertainty over our sales outlook in China.

Please note that we maintain our previous forecast of CapEx, depreciation expenses, and R&D expenses as indicated in the footnotes.

We will continue to implement profit improvement activities and aim to develop a strong earnings base that can handle environmental changes.

This concludes my presentation for our second-quarter financial results.

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.