Toyota Nearly Doubled Its Operating Profit

Toyota Motor Co. (TM), the world’s top-selling automaker, nearly doubled its operating profit from a year earlier as better pricing, productivity gains, and supply-chain improvements boosted sales.

Operating income for Toyota surged 94% from the year-ago quarter to 1.12 trillion yen ($7.89 billion), beating estimates of 945 billion yen ($6.66 billion). Profit growth was driven by rising sales, productivity gains, and currency tailwinds from a weaker yen, which boosted exports of the company’s vehicles. Net income totaled nearly 1.33 trillion yen ($9.37 billion), up 75% from the same quarter last year.

Toyota sold just under 2.33 million cars in the April-June period, up 15.5% from the year-ago quarter, with sales of electric vehicles (EVs) up close to 30%. The company attributed higher sales to productivity gains, easing supply-chain constraints for semiconductors, and better pricing that more accurately reflected each car’s retail value.

“As a result of selling each car meticulously at prices that match the product appeal refined through Toyota’s long-standing ‘making ever-better cars’ initiative, operating income increased, which helped reduce the impact of the sharp rise in materials prices,” the company said in its earnings presentation.

On the other hand, while supply-chain constraints have eased, that’s led to a backlog of orders at the company, with customers having to wait extended periods for deliveries.

“Many customers are still waiting for delivery of their cars, especially new models, for a long time, so we are working to deliver them as soon as possible,” Toyota said.

For 2023 as a whole, Toyota forecasts a 3-trillion yen ($21.14 billion) profit, saying business conditions haven’t markedly changed from three months ago. This compares with an average forecast of 3.6 trillion yen ($25.37 billion) compiled from 23 market analysts, Reuters reported.

With more than 9 million cars sold in 2022, Toyota is the world’s top-selling automaker, a position it has held for three years after surpassing then-top-seller Volkswagen in 2020.

More Profitable Than Tesla

For the first time since 2021, Toyota is more profitable than EV rival Tesla (TSLA), with an operating profit margin of 10.6% in the latest quarter, compared with Tesla’s 9.6%. Toyota’s electrification efforts and growing EV sales have taken some market share away from Tesla, with Toyota’s battery electric vehicle (BEV) sales up a stunning 623% from the same quarter last year.

Toyota shares rose 2% this week, and are up more than 25% so far this year.