豐田汽車 (TM) 2014 Q3 法說會逐字稿

Hello, everyone.

Welcome to the financial results conference call for the fiscal year 2014, third 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 Ms. Miho Kamizaki, our interpreter, with us.

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

First, Mr. Otake will briefly discuss the highlights of Toyota's annual results, and then Ms. Kamizaki 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 result may be materially different from this statement.

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 of the statements can be downloaded from our Internet home page.

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 the financial results for the three months ended December 2013.

Let me begin with slide 5.

Our consolidated vehicle sales for the third quarter of this fiscal year increased by 204,000 units to 2,317,000 units year on year.

In Japan, sales increased by 64,000 units to 540,000 units.

This was due to the drop of sales after the expiry of the eco-car subsidies in the same period of the previous year in addition to the improving economic sentiment.

In North America, where the new car market continued to be solid, sales increased by 60,000 units to 664,000 units, driven by RAV4, Camry and Tundra in particular.

In Europe, the new model of Corolla, Auris and the Auris hybrid contributed [that] sales increased by 32,000 units to 223,000 units.

In Asia, the sales decreased by 6,000 units as a result of the expiry of the tax rebate for first-time buyers in Thailand, despite the sales increase in Indonesia due to the successful launch of the new Agya.

In other regions, the sales increase by 54,000 units was mainly driven by Central and South America and the Middle East.

As shown on the right side of the slide, our consolidated vehicle sales for the nine months ended December 2013 increased by 156,000 units to 6,785,000 units from the same period last year.

Please see slide 6. Our consolidated financial performance for the third quarter result is net revenues of JPY6,585 billion; operating income of JPY600.5 billion; pre-tax income of JPY678.9 billion; and net income of JPY525.4 billion.

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

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

Net income for the third quarter was JPY525.4 billion, up JPY425.5 billion compared to the same period last year.

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

In addition to the impact of the weaker yen, operating income increased due to marketing efforts such as increased vehicle sales and cost reduction activities through collaboration with our suppliers.

As summarized in slide 8, our consolidated financial performance for the nine months ended December 2013 resulted in net revenues of JPY19,122.5 billion; operating income of JPY1,855.9 billion; pre-tax income of JPY2,022.4 billion; and net income of JPY1,526.0 billion.

For your information, slide 9 summarizes the major factors which impacted net income for the nine month period ended December 2013.

Net income increased by JPY877.9 billion to JPY1,526.0 billion.

This was due to our efforts in cost reduction and marketing, in addition to continued yen depreciation.

Next, with slide 10, I'd like to explain operating income for the third quarter by region.

In Japan, operating income grew as a result of favorable foreign exchange rates, increased vehicle sales and improved model mix.

In North America, operating income increased sharply from the same period last year, which included the recording of settlement cost related to the US class action litigation.

Increased vehicle sales, improved model mix and progress in cost reduction also contributed to the growth of operating income year on year.

We secured positive growth of operating income in Europe and Asia.

For your information, slide 11 summarizes operating income for the nine months ended December 2013 by region.

As shown, all regions secured positive growth of operating income.

Next, please see slide 12 for financial services.

Operating income, excluding interest rate swap valuation gains and losses for the third quarter, increased by JPY12.2 billion to JPY80.2 billion.

This was mainly due to increased lending balance and translational impact of the weaker yen, which more than offset the negative impact from decreased lending margins.

Please refer to slide 13.

Equity in earnings of affiliated companies for the third quarter was JPY89.2 billion, up JPY31.0 billion from the same period last year.

This was mainly due to strong earnings by our affiliated companies in Japan and China.

For your information, the fiscal year end of our affiliated companies in China is in December.

Equity in earnings in these companies for the third quarter, therefore, reflected their earnings from July to September 2013.

Now I would like to move on to discuss our outlook for the full fiscal year ending in March 2014.

Please see slide 15.

With regard to our consolidated vehicle sales for the current fiscal year, we maintain our November forecast of 9.1 billion units.

In Japan, where the orders and sales of new models such as Harrier, Noah and Voxy and hybrid vehicles have been particularly solid, we now revise our sales expectation to 2.28 million units, up 50,000 units from our November forecast.

We will continue to work closely with our distributors to deliver as many vehicles as possible to our customers.

In overseas markets, on the other hand, we now expect 50,000 fewer vehicle sales than our November, forecast in consideration of the recent changes in new car demand.

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

Please see slide 16.

We revise our foreign exchange rate assumption to JPY100 to $1 and JPY140 to EUR1 from January 2014 onwards.

On a full-year basis, this implies JPY100 to $1 and JPY134 to EUR1.

Based on this revised currency assumption, our forecast of consolidated financial performance for the current fiscal year is now, net revenues of JPY25,500 billion; operating income of JPY2,400 billion; pre-tax income of JPY2,530 billion; and net income of JPY1,900 billion.

Now, please see slide 17 for further analysis of our latest operating income forecast in comparison to our November forecast.

We revise our operating income forecast upward by JPY200 billion to JPY2,400 billion.

This is due to the progress in our recent profit improvement activities through cost reduction and marketing efforts, in addition to the change in our assumption of the foreign exchange rate to reflect the trend of yen depreciation.

Finally, as shown in slide 18, we revise our forecast of CapEx and depreciation expenses.

This largely is a result of our revised foreign exchange rate assumption.

This concludes my presentation on our fiscal results for the third quarter of the current fiscal year ending in March 2014.

Thank you very much for your attention.