豐田汽車 (TM) 2014 Q1 法說會逐字稿

Hello, everyone.

Welcome to the financial results conference call for the fiscal year 2014 first quarter.

I am [Nomkas Takano] from the Accounting Division of Toyota Motor Corporation.

Today, we have Mr. Tetsuya Otake, Managing Officer in charge of the Accounting Group of Toyota Motor Corporation; and Miss [Keiko Morita], an interpreter, with us.

The agenda of today's conference call is as follows.

First, Mr. Otake will briefly discuss the highlights of Toyota's earning results and then Miss Morita will take over the rest of presentation.

This will take about 10 minutes.

After the presentation, you are welcome to ask questions.

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 the 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'd like to turn the call over to Mr. Otake.

Thank you for joining us today.

This is Tetsuya Otake.

I'd like to discuss Toyota's financial results for the three months to June 2013.

Please see slide 5. Our consolidated vehicle sales for the first quarter of this fiscal year decreased by 37,000 units to 2,232,000 units, compared to the same period last year.

In Japan, while the new Crown, which was launched in December 2012, and the new Lexus IS which was fully [renewed] in May, have been extremely popular, sales, nevertheless, decreased from the first quarter of the last fiscal year when the eco-car subsidies boosted demand.

In North America, in the other hand, where the new car market has been solid, sales have been growing driven by RAV4 and Avalon among others.

In Europe, sales decreased as a result of the sluggish market.

In Asia, sales decreased as well, mainly as a result of the crisis in China, a slowdown of the economy in India, and the expiry of the first-time car buyer tax rebate in Thailand.

For your information, the fiscal year ends in December in China, hence the first quarter result for China represents the period from January to March 2013.

In other regions, sales increased due to solid sales in Central and South Africa, America, the Middle East and Africa.

Please see slide 6. Our consolidated financial performance for the first quarter resulted in a net revenue of JPY6,255.3 billion; operating income of JPY663.3 billion; a pre-tax income of JPY724.1 billion; and a net income of JPY562.1 billion.

And now, I would like to hand the rest of today's presentation over to Miss Morita, our interpreter.

Next, using slide 7, I would like to explain the major factors impacting net income year on year.

Net income for the first quarter increased by JPY271.8 billion to JPY562.1 billion, compared to the first quarter of the previous fiscal year.

The left side of slide 7 shows the major factors that impacted the operating income.

Operating income increased due to the impact of foreign exchange rates, as well as our global efforts for profit improvement through cost reduction activities such as the Company-wide VA, and through marketing activities such as enhancement, other model mix and pricing.

Next, with slide 8, I would like to explain operating income for the first quarter by region.

As you can see, operating income increased in each of the regions.

In Japan, operating income increased substantially, due to the favorable foreign exchange rates and profit improvement activities, despite increasing R&D and other expenses.

In North America, operating income improved, thanks to increased vehicle sales and cost reduction efforts.

In Asia, we secured positive growth in operating income with lower vehicle sales, mainly as a result of cost reduction efforts.

Next, please look at slide 9 for Financial Services.

Operating income, excluding valuation gains and losses related to interest rate swaps, for the first quarter was JPY78.2 billion, up JPY8 billion from the previous year.

Although the lending margin decreased and the costs related to loan losses and residual value losses increased, operating income grew as the lending balance grew, mainly in North America and Asia.

Please refer to slide number 10.

Equity in earnings of affiliated companies for the first quarter was JPY89.9 billion.

This represented an increase of JPY18.5 billion year on year, thanks to the strong financial performance of affiliated companies in Japan.

Next, let me move on to discuss our outlook for the full fiscal year to March 2014, and for that, please look at slide 12.

With regard to our projected consolidated vehicle sales for the full fiscal year, while taking into account the slowing down in markets and increased competition in Asia and other regions, we maintain our May forecast of 9.1 million units, representing an increase of 229,000 units year over year, reflecting sales growth in Japan.

In Japan, we plan to capitalize on the demand growth supported by improving consumer sentiment by introducing attractive new models into the market.

In overseas markets, despite uncertainty over some parts of the emerging markets, we plan to increase vehicle sales by actively stimulating demand with introduction of the new Corolla in North America and Europe and the new compact cars dedicated to the emerging markets.

Please look at slide 13.

As a result, and based on the actual foreign exchange rate for the first quarter, we revised our forecast of consolidated financial performance for the current fiscal year as follows.

Net revenues JPY24 trillion; operating income JPY1,940 billion; pre-tax income JPY2,030 billion; and net income JPY1,480 billion.

Please note that we maintain our assumption on the foreign exchange rates of JPY90 to $1 and JPY120 to EUR1 from July onwards.

On a full-year basis, based on the actual exchange rates for the first quarter, we are assuming JPY92 to $1 and JPY122 to EUR1.

While paying close attention to the conditions in each market and taking measures flexibly in response, we plan to continue our efforts to improve the Company's profit structure.

Finally, please look at slide 14 for our revised forecasts of CapEx, depreciation expenses and R&D expenses based on the revised ForEx rate assumption.

This concludes my presentation on the financial results for the first quarter.

Thank you very much for your attention.