豐田汽車 (TM) 2014 Q2 法說會逐字稿

Hello, everyone.

Welcome to the financial results conference call for the fiscal year 2014 second 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 [Mitili Ota], 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 Ota will take over the rest of the 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 materials, 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.

Hello, everyone.

Thank you for joining us today.

This is Tetsuya Otake.

I'd like to discuss Toyota's financial results for the first half of the fiscal year ending March 2014.

Please see slide 5. Our consolidated vehicle sales for the first half of this fiscal year decreased by 48,000 units to 4,468,000 units, compared to the same period last year.

In Japan, sales were 1,101,000 units, down 91,000 units from the first half of the last fiscal year when eco-car subsidies boosted demand.

In North America, where the new car market has been solid, sales increased by 37,000 units to 1,298,000 units, driven by new models such as RAV4, Avalon.

In Asia, sales decreased by 60,000 units to 780,000 units, mainly as a result of the expiry of the first-time car buyer tax rebate in Thailand, and the slowdown of demand in India.

In other regions, the Middle East and Central and South America, in particular, contributed as sales increased by 71,000 units year on year.

Please see slide 6. Our consolidated financial performance of the first half of this fiscal year resulted in net revenues of JPY12,537.4 billion; operating income of JPY1,255.4 billion; a pre-tax income of JPY1,343.5 billion; and net income of JPY1,000.6 billion.

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

Now, I'd like to hand the rest of today's presentation over to Miss Ota, our interpreter.

Next, using slide 7, I would like to explain the major factors impacting net income from the same period last year.

Net income increased by JPY452.3 billion to JPY1,000.6 billion compared to the first half of the previous fiscal year.

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

In addition to the impact of the weaker yen, operating income increased due to our joint efforts with the suppliers and distributors for profit improvement through cost reduction and marketing activities such as enhancement of the model mix.

As summarized in slide 8, our consolidated financial performance for the second quarter resulted in net revenues of JPY6,282.1 billion; operating income of JPY592 billion; pre-tax income of JPY619.3 billion; and net income of JPY438.4 billion.

For your information, slide 9 summarizes the major factors which impacted the second quarter net income year on year.

Next, with slide 10, I would like to explain operating income for the first half of this fiscal year by region.

In Japan, operating income reached the highest level ever for a first half of the fiscal year, due to favorable foreign exchange rates and the progress in our cost reduction activities.

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

Across Europe, Asia and other regions, we secured positive growth of operating income, compared to the same period last year.

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 valuation gains and losses related to interest rate swaps, increased by JPY14.7 billion to JPY162.5 billion for the first half year of this fiscal year, compared to the same period last year.

Although the costs related to loan losses and residual value losses increased, and the lending margin decreased, operating income improved as the lending balance grew in all regions and there was a positive translational impact from ForEx rates.

Please refer to slide 13.

Equity in earnings of affiliated companies for the first half of this fiscal year resulted to JPY158.7 billion, up JPY34.9 billion from the previous year.

Since our affiliated companies in China have the end of their fiscal years in December, this result reflects their earnings from January to June 2013.

Next, I would like to discuss our interim dividend.

Please look at slide 14.

I would like to propose JPY65 per share, an increase of JPY35 over last year.

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

While ensuring our long-term financial stability, we would like to meet the expectations of our shareholders after considering our earnings results and investment requirements.

Now let me move on to discuss our outlook for the first full fiscal year to March 2014.

Please see slide 16.

With regard to our consolidated vehicle sales for the full fiscal year, we maintain our previous forecast of 9.1 million units.

In Japan, we are increasing our sales forecast by 10,000 units to 2.23 million units, due to continued strong customer demand in new car purchases against the backdrop of improving economic sentiment, and strong demand for new hybrid models such as Corolla Hybrid and [Yaris].

In overseas market, we plan to increase vehicle sales mainly in developed markets such as North America and Europe, but we are decreasing our sales forecast in Asia by 60,000 units in consideration of the latest sales trends in Thailand, India and Indonesia.

We intend to monitor the market conditions in each country closely and implement effective marketing measures accordingly.

Please see slide 17.

We have revised our foreign exchange rate assumption to JPY95 to $1 and JPY130 to EUR1 from October onwards, thus [adopting] JPY97 to $1 and JPY130 to EUR1 on a full-year basis.

Based upon this revised currency assumption, our forecasts of consolidated financial performance for the current fiscal year are now, net revenues of JPY25 trillion; operating income of JPY2,200 billion; pre-tax income of JPY2,290 billion; and net income of JPY1,670 billion.

Now please see slide 18 for the analysis of our latest operating income forecast in comparison to our previous forecast.

We have revised our operating income forecast upward by JPY260 billion to JPY2,200 billion.

This is because of the progress in profit improvement activities through marketing and cost reduction efforts, in addition to the change in our foreign exchange rates assumption due to the weaker yen.

We will continue to forecast on strengthening our profit structure through continued growth profit improvement per vehicle and control of fixed costs in order to achieve sustainable growth.

Finally, please see slide 19 for our revised forecasts of CapEx and depreciation expenses.

With regard to investment in necessary areas, we plan to utilize our resources actively and flexibly while pursuing efficiency even more than before.

So this concludes my presentation on the financial results for the first half of the fiscal year ending March 2014.

Thank you very much for your attention.