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Toyota posts surprise profit jump
TOKYO, Japan (Reuters) -- Toyota Motor, Japan's top auto maker, has posted a surprise jump in six-month operating profit thanks to robust sales growth in the second quarter, and said it expected record profits again for the full year. Most analysts had expected Toyota's half-year profits to be flat at best, after operating profit slipped 13 percent in the April-June first quarter due to a stronger yen. But Toyota said Wednesday the euro's 17-yen rise fully offset the damage from a five-yen fall in the dollar, leaving profits to rise on a 7.4 percent climb in global sales volume and cost-reducing efforts. "The results were surprising. There's been some tremendous cost-cutting," said HSBC Securities analyst Christopher Richter. Toyota does not provide profit projections on a group basis, but it jacked up parent-only profit and sales forecasts for the full year despite an expected blow from a weaker dollar in the latter half. "Following on from last year, we are aiming for record (group) profits on every level," Takeshi Suzuki, Toyota's managing officer, told a news conference. Toyota is by far the most profitable car maker in the world and it continues to expand sales in all main markets -- the United States, Japan, Europe and Asia -- with a fast-growing model lineup and a reputation for building top-quality vehicles. Its projections stand in contrast to those at rival Honda Motor, which reduced its full-year operating profit forecast last month citing the dollar's 10-yen fall over the past few months. Third-ranked Nissan Motor has left its projections unchanged, saying currency factors would dampen the impact of stellar volume growth. Toyota, also the world's most valuable auto maker with a market capitalisation of $111 billion, has been particularly successful in the profitable U.S. market, having expanded its market share to 11.2 percent in the year to date from 10.4 percent in 2002, mainly at the expense of Detroit's "Big Three." Attesting to its strong sales power, Toyota raised its group global sales forecast to 6.57 million units from 6.41 million for the year to March. In North America, it now expects to sell 2.12 million vehicles instead of 2.03 million. The figures include sales at minivehicle maker Daihatsu Motor and truck maker Hino Motors "Fundamentally, it's just an extremely strong and broad-based manufacturer, and it looks very well positioned in the very long term as well," said Jeremy Hall, a fund manager at Henderson Investors Japan. While Toyota trails General Motors and Ford Motor in global sales volume, Toyota far outstrips them in earnings. In the latest quarter, it earned 7.3 cents in net profit on each dollar in sales, compared with 9/10 of a cent for GM and a loss for Ford. For April-September, Toyota's group operating profit was up 12 percent from the same period last year at 767.77 billion yen ($7 billion). Net profit surged 23 percent to 524.46 billion yen, as sales grew eight percent to 8.22 trillion yen. Although analysts believe Toyota's growth prospects are good thanks to its sound global expansion strategy, they said the dollar's slump presents considerable risk in the short term, putting pressure on its U.S. business in the second half. Toyota now expects the dollar to average 112 yen this year instead of the 115 yen it assumed before -- presenting a hefty blow considering that every one-yen fall in the currency is estimated to shave 20 to 25 billion yen from its operating profit. Copyright 2003 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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