Arrive and succeed. This has been Koji Sato's first year at the helm of Toyota. The last quarter increased profits by 77%, to accumulate record results in all areas. On Wednesday, Sato told a press conference about his best-ever earnings and where he planned to invest the enormous amount of cash.
The idea is… stop. Stop growth to ensure “our long-term future growth.” You will make investments in suppliers, dealers, employees and next-generation technologies. 42% of the profits will go to this last section, where electrification, software and artificial intelligence are found, up to 11.24 billion dollars, in the current fiscal year. It will allocate $2.51 billion to improve human capital and support suppliers or distributors. The outlays are so large that they will affect profits this fiscal year.
Toyota forecasts that operating profit and net income will fall in the current fiscal year ending March 31, 2025. Don't expect more records, at least in the short term. Now it's time to strive to regroup and remain profitable in the long term after achieving record sales and production. Here are some figures from this giant:
- In the fiscal fourth quarter, which ended March 31, Toyota's operating profit soared 77% to $7.34 billion. A year before it was 4.14 billion dollars.
- The operating profit margin reached 10.0% that quarter, an excellent figure for a generalist brand… and well above the 6.5% of the previous year.
- Net income nearly doubled to $6.59 billion in January-March.
- Global revenue rose 14% to $73.17 billion in the quarter.
How did Toyota achieve these record numbers?
If one brand knew how to handle the global shortage of semiconductors, it was Toyota. While other brands were struggling and shutting down production plants, Toyota accelerated its global manufacturing machinery to record production. Thus, the Japanese giant produced a record of 11.21 million vehicles in the fiscal year ending March 31, including Daihatsu and Hino trucks. The third consecutive year with increases. These good sales were helped by favorable exchange rates (since they denominate profits in yen and that added up to 305 billion yen ($2.02 billion).
Not everything was a walk, because in the last quarter global sales fell a little (7.9%), weighed down by deliveries in Japan (while they rose 18% in the United States and 13% in Europe) and we had to deal with with some scandal such as that of Hino Motors, accused of manipulating emissions certifications (its merger with Mitsubishi Fuso, the Japanese truck manufacturer owned by Daimler, is being prepared). And Daihatsu had to suspend shipments of its models due to problems in side crash safety tests.
The second point was the rise of non-plug-in hybrid vehicles. We analyze this technology in depth in this video:
Car sales are scared with this technology in the Toyota Group. In the fiscal year that just ended they sold more than 3.7 million hybrids, 32% more than the previous year, reaching a third of the total sales volume. Of course, their electrics don't take off. They sold just 116,654 electric cars in the fiscal year that ended March 31. More than triple the amount it sold the previous year (they were zero in 2020.
Chief Financial Officer Yoichi Miyazaki indicated that customers opt for hybrid cars because they are ecological and efficient, and “because technological improvements also make them fun to drive.” In some cases, prices have fallen along with those of internal combustion. And hybrids don't generate the range anxiety that pure battery electrics do.
Toyota hybrid cars are even more profitable than gasoline. Therefore, the more they sell, the more profits they make. In fact, they expect their sales to increase by 25%, to 4.65 million this year, 42% of the total volume of global registrations. The electric ones increase their forecasts by 46%, up to 171,000 units… they will continue to be residual in the total until 2025.
