豐田汽車 (TM) 2015 Q4 法說會逐字稿

Hello everyone. Welcome to the financial result conference call for the fiscal-year 2015. I'm Nobukatsu 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. 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 earnings results and 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.

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 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. I'm Tetsuya Otake. It's my pleasure to discuss Toyota's financial results for the fiscal year which ended in March 2015. Let me start with Slide 5.

Our consolidated vehicle sales for the fiscal year decreased by 144,000 units year on year to 8.972m units. This was due to declined sales mainly in Japan affected by the consumption tax hike [in the] Asia, where main markets remained stagnant despite increased sales in North America.

Please see Slide 6. Our consolidated financial performance resulted in net revenues of JPY27,234.5b, operating income of JPY2,750.5b, pre-tax income of JPY2,892.8b and net income of JPY2,173.3b.

Now I would like to hand the rest of today's presentation to Miss. Keiko Morita, our interpreter.

Next, using Slide 7, I would like to highlight the major factors which impacted operating income year on year.

The positive factors, such as favorable foreign exchange rates and cost- reduction efforts, more than offset the negative factors, such as decreased vehicle sales and an increase in expenses, including investments to enhance our future competitiveness.

As a result operating income increased by JPY458.4b compared to the previous fiscal year.

Next I'd like to discuss operating income for each region. Please look at Slide 8.

In Japan, although new products, such as the Lexus NX and the Esquire, and the remodeled Alphard and Vellfire which were launched in January, drove sales, overall vehicle sales decreased by 211,000 units to 2.154m as demand was affected by the raised consumption tax.

Operating income, however, increased by JPY61.3b to JPY1,571.4b as a result of favorable foreign exchange rates and cost-reduction efforts, despite increased expenses to accelerate research and development, among others.

Please look at slide number 9. In North America, against the backdrop of solid market conditions, vehicle sales rose by 186,000 units year on year to 2.715m, driven particularly by the mid-cycle enhanced Camry in addition to the Corolla and the RAV4.

Operating income excluding valuation gains and losses from interest rate swaps etc. was JPY537.9b, up JPY196.4b compared to the previous fiscal year. This was mainly a result of increased vehicle sales and cost-reduction efforts.

Please look at Slide 10. In Europe vehicle sales grew by 15,000 units year on year to 859,000 units. This was due to solid sales of the Yaris and the Camry and the contribution from the sales of the new Aygo.

Operating income was JPY81.1b, up JPY22.8b year on year as a result of cost- reduction efforts in addition to increased vehicle sales.

Please note that the fiscal year for subsidiaries in Russia ends in December. Therefore, the above reflects their performance from January to December 2014.

Please look at Slide 11. In Asia overall vehicle sales were down 120,000 units year on year. This was primarily due to declined sales in Thailand and Indonesia, where demand remained weak and competition intensified, despite increased sales of renewed models such as the Yaris and the Corolla.

In spite of weaker sales operating income improved by JPY26b year on year to JPY421.7b, mainly as a result of cost-reduction efforts.

Please move on to Slide 12. In other regions vehicle sales increased in Central and South America, but decreased mainly in Africa. As a result overall vehicle sales fell by 14,000 units to 1.755m from the previous fiscal year.

Operating income was JPY111.5b, up JPY68.9b year on year primarily due to marketing efforts and decreased expenses, which more than offset the negative impact of the depreciation of the local currencies.

Please be reminded that the costs related to the ending of production in Australia were posted in the previous fiscal year.

Now please look at Slide 13 for financial services. Operating income excluding valuation gains and losses from interest rate swaps etc. maintained the level of the previous fiscal year, at JPY321.9b.

This was primarily due to an increased lending balance and the translational impact of the weaker yen, despite increased costs related to loan losses and residual losses.

Next, please refer to Slide 14. Equity in earnings of affiliated companies for the fiscal year was JPY308.5b, down JPY9.8b year on year. Please note that the fiscal year end of our affiliated companies in China is in December and, therefore, equity in earnings of these companies reflects their earnings from January to December 2014.

Let me move on to Slide 15. With regard to the year-end dividend, we plan to propose JPY125 per share at the annual general meeting of shareholders in the next month.

The full-year dividend will therefore be JPY200 per share, including the interim dividend of JPY75 per share. This represents an increase by JPY35 per share compared to the previous fiscal year.

We regard dividends as our most important means to return value to shareholders. In order to develop a long-term relationship of trust with our shareholders we plan to pay dividends stably and sustainably.

Please be informed that at the Board of Directors' meeting earlier today a plan to repurchase up to JPY300b, or 40m shares of our common stock was resolved. Under the principle of paying stable and sustainable dividends we intend to repurchase shares flexibly as a means of shareholder return while considering our long-term capital efficiency.

Now I'd like to move on to discuss our outlook for the current fiscal year ending in March 2016. Please look at Slide 17.

With regard to our consolidated vehicle sales, we expect a decline by 72,000 units year on year to 8.9m units. We are assuming stronger sales in North America, where the market is solid, but weaker sales in Asia, where the sales environment is getting more challenging, and in emerging markets such as Russia and the Middle East, where declining oil prices are affecting demand.

Please move on to the next slide. Based on the ForEx assumptions of JPY115 to the US dollar and JPY125 to the euro our forecast of consolidated financial performance for the current fiscal year is net revenues of JPY27,500b, operating income of JPY2,800b, pre-tax income of JPY2,970b and net income of JPY2,250b.

Now please look at Slide 19 for the analysis of our operating income forecast for the current fiscal year in comparison with the previous fiscal year.

We are expecting a negative impact from vehicle sales and model mix as well as the foreign exchange rates, as we have factored in a depreciation of the Russian ruble, the Brazilian real etc.

Despite this challenging environment, and while proactively investing to promote competitiveness and innovation for the future, we are determined to improve our profit structure even further through continued marketing efforts, such as efficient sales promotions and cost-reduction efforts focusing on the Company-wide VA and new model launches.

Finally, please refer to Slide 20 for our forecast of R&D expenses, CapEx and depreciation expenses.

With regard to research and development of technologies we have launched the Mirai and started commercializing Toyota safety sense, a package of technologies that support safe driving, new engines with superior thermal efficiency and fuel efficiency and new turbo-charged engines. Thus, our efforts over the past years are gradually beginning to bear fruit.

In the current fiscal year we will start renewal of our core models which are sold across emerging markets and in the second half of the year we plan to launch the model which incorporates TNGA. The full contribution of these models to our sales volumes and earnings is expected to be seen some time after 2016.

In the meantime we remain committed to making a steady progress towards ever- better cars for our customers while pursuing effectiveness and efficiency of our investments.

While enhancing our true competitiveness and earnings structure we will continue to aim at achieving sustainable growth by investing in new areas for growth and developing new technologies in view of the next 10 years, 20 years and beyond.

This concludes my presentation on the financial results for the fiscal year which ended in March 2015. Thank you very much for your attention.

Statements in English on this transcript were spoken by an interpreter present on the live call. The interpreter was provided by the Company sponsoring this Event.