豐田汽車 (TM) 2013 Q3 法說會逐字稿

Hello, everyone. Welcome to the financial results conference call for the fiscal year 2013 third quarter. I am [Nomkas Takano] 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, and Miss Kelko Morita, an interpreter with us.

The agenda of today's conference call is as follows. First, Mr. Ijichi will briefly discuss the highlights of Toyota's earnings results, then Miss Morita 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 2 of today's presentation material, and a complete cautionary statement concerning insider trading is included on page 3. Both the statements can be downloaded from our Internet homepages.

Now, I'd 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 for our conference call, despite your occupied schedules.

The consolidated financial results of the three months of the third quarter of fiscal year ending in March saw a reduction of operating income by JPY24.9 billion year on year, due to booking of one-time expenses among others, despite the fact that cost improvement, increase in sales volume in overseas markets, or currency values, made positive contributions.

On the other hand, we revised the outlook of consolidated operating income for the full year by JPY100 billion, reflecting the current sales conditions outside Japan, and easing of excessively strong yen. And I would like to explain to you the details of those in the presentation.

Let's begin with slide 5. Our consolidated vehicle sales for the third quarter of this fiscal year increased by 144,000 units to 2,113 million units year on year. In Japan, vehicle sales decreased by 85,000 units. This was due to a high level of sales driven by the recovery of production from the great east Japan earthquake in the third quarter last year, and declined demand as a consequence of the expiration of the eco-car subsidies this third quarter.

In Asia, which was affected by the floods in Thailand during the third quarter last year, and in other regions, vehicle sales grew significantly. Our consolidated vehicle sales for the nine months to December 2012 increased by 1,634 million units, to 6,629 million units year on year.

As summarized in slide 6, our consolidated financial performance for the third quarter resulted in net revenues of JPY5,318.7 billion; operating income of JPY124.7 billion; pre-tax income of JPY131.2 billion; and net income of JPY99.9 billion.

Next with slide 7, I would like to explain the major factors impacting net income year on year. Net income for the third quarter was JPY99.9 billion, up JPY18.9 billion compared to the same period last fiscal year. The left side of the slide shows the major factors which impacted operating income. The positive factors include cost reduction efforts in close collaboration with our suppliers, increased vehicle sales in markets outside Japan, and the slight easing of the excessively strong yen.

However, operating income decreased, due to negative non-recurring factors, such as costs relating to the settlement of the economic-loss litigation in the United States, which we announced last December.

As summarized in slide 8, our consolidated financial performance for the nine months to December 2012 resulted in net revenues of JPY16,227.1 billion; operating income of JPY818.5 billion; pre-tax income of JPY925.7 billion; and net income of JPY648.1 billion. This represents an increase in both revenues and earnings, in comparison to the same period last year.

For your information, slide 9 summarizes the major factors which impacted net income for the nine-month period year on year.

Next, using slide 10, I would like to explain operating income for the third quarter by region. In Japan, operating income improved, despite a drop in demand after the expiration of the eco-car subsidies, thanks to cost reduction efforts and the impact of currency fluctuations.

In North America, operating income decreased as a result of recording, in the segment, costs relating to the settlement of the economic-loss litigation in the United States, that I mentioned earlier.

In Asia, operating income increased significantly, as a result of the recovery from supply shortage caused by the Thai floods in the same period last year.

Slide 11 summarizes operating income for the nine months to December 2012 by region. In Japan, operating income improved significantly. This was thanks to an increase in vehicle sales from last year's low level, when the supply shortage was caused by the great east Japan earthquake, as well as progress in cost reduction efforts.

In Asia, operating income reached a new record level on the nine-month basis, as a result of increased vehicle sales.

Next, please see slide 12 for financial services. For the third quarter, operating income, excluding interest rate swap valuation gains and losses, increased by JPY4.9 billion, to JPY67.9 billion year on year. This was mainly due to an increased lending balance. For the nine months to December 2012, on the other hand, operating income declined as a result of a high level of reversed provisions for loan losses and residual losses in the same period last year.

Let me move on to slide 13. Equity in earnings of affiliated companies, for the third quarter, was JPY58.1 billion, up JPY2.5 billion year on year, mainly due to strong earnings of our affiliated companies in Japan. For your information, the fiscal year of our affiliated companies in China ends in December.

Equity in earnings of these companies for the third quarter, therefore, reflected their earnings from July 2012 to September 2012, which were largely unaffected by the recent China-Japan relations. Nevertheless, their earnings did decrease year on year.

Now I would like to move on to discuss our outlook for the full fiscal year ending in March 2013. Please look at slide 15. With regard to our consolidated vehicles sales for the current fiscal year, we revised our expectation from our November forecast of 8.75 million units to 8.85 million units, in consideration of the latest sales trend outside Japan. In North America, where the market is expected to remain solid, we plan to increase our sales, particularly of new models such as Avalon and Lexus LS.

In Japan, while we maintain our previous forecast, we will implement carefully planned marketing programs to deliver as many vehicles as possible to our customers in the fourth quarter, during which demand has tended to be higher.

Please look at slide 16. We revised our foreign exchange rate assumptions to JPY84 per $1, and JPY110 to EUR1 from January 2013 onwards. On a full fiscal year basis, this implies JPY81 to $1, and JPY104 to EUR1.

Based on this revised currency assumption, our forecasts of consolidated financial performance for the current fiscal year are now net revenues of JPY21,800 billion; operating income of JPY1,150 billion; pre-tax income of JPY1,290 billion; and net income of JPY860 billion.

Now please look at slide 17 for further analysis of our latest operating income forecast, compared to our previous forecast. In consideration of the latest currency environment, in which the excessive appreciation of the yen has been eased, and the progress of our profit improvement activities thus far, we upwardly revise our operating income forecast by JPY100 billion, to JPY1.15 trillion. We will continue to make efforts to establish a stable business foundation by further improving gross profit per vehicle, and strictly controlling fixed costs.

Finally, as shown in slide 18, we revised our forecasts of CapEx and depreciation expenses. This largely is a result of a revised foreign exchange rate assumption.

This concludes my presentation on our third 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.