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Toyota Motors Q3 2018 Earnings Preview

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Toyota Motors ( TM ) is likely to report its Q3 2018 (Apr-Mar fiscal year) results on February 5 th 2018 . We expect the decline in the company’s operating income to continue in this quarter as it faces a tough industry environment and a slowdown in Japan. For the six months ended September 2017, Toyota Motors had reported a decline of 20.3 billion yen in its operating income due to an increase in marketing activities and other expenses. The company’s guidance indicates that net income is likely to decline by 18% in 2017-2018 due to a challenging industry environment.

The chart below summarizes our revenue and income expectations for Toyota Motors for the calendar years 2017 and 2018:

Key Trends:

  • For the calendar year 2017, Toyota Motors’ total production in Japan increased by 5.7% while the world-wide production increased by 2.5%. Sales in Japan increased by 4.5%, while exports grew by 5.2%. While there was a decline in the sales of the Lexus model in Japan, sales of mini-vehicles grew by 4.6%. Exports to North America were also on the rise in 2017.
  • Toyota is taking several measures to adapt to the changing trends in the automotive industry, where passenger cars are no longer in high demand. These measures include shifting of research and development towards autonomous and clean energy vehicles. The company has several longer term initiatives such as the launch of a new mobility ecosystem and concept vehicle at the CES and a goal for selling more than 5 million electrified vehicles by 2030.
  • For the calendar year 2018, Toyota Motors does not expect an improvement in production. The company expects worldwide production to decline by 1% and an increase of 1% in worldwide sales.

We will be keenly watching Toyota Motors’ operating income in Q3 2018 to analyze the impact of a slow production and sales growth on its margins.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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