Toyota profits most from “Abenomics” image

Japan’s largest manufacturer and also the world’s best selling automaker, which produces almost half its vehicles in Japan, yesterday raised its full-year net income forecast by 13 % as the weaker yen boosted earnings from exported Prius and Lexus vehicles. Profit last quarter jumped 70 %, led by growth in Japan and Europe.

And this is happening all the while after most Japanese companies having reported earnings this season, Toyota helped ease creeping concerns about the health of Japan Inc. – as companies from Nissan Motor Co. to Sony Corp. and Canon Inc. lowered their profit forecasts amid slowing demand from emerging markets. Nissan and Sony lost almost $7 billion in combined market value the day after they reported results.

“The weak yen triggered by Abenomics has helped auto companies including Toyota, especially because they can fully enjoy the benefit of it,” said Kazuyuki Terao, the Tokyo-based chief investment officer of Allianz Global Investors Japan Co. “The effects from the weak yen didn’t work on Sony or Canon because they have moved most of production overseas already and the demand for products at such hi-tech companies, PC, TV, digital cameras is very weak.”

Toyota, which earned more profit than General Motors Co. and Volkswagen AG combined last quarter, has benefited from the 12 percent slide in the yen against the dollar this year, helped by Prime Minister Shinzo Abe’s monetary-easing policies.

The world’s largest automaker makes almost half of its vehicles in Japan, twice the proportion at Nissan and Honda Motor Co. The Toyota City, Japan-based automaker has reiterated its commitment to maintain 3 million units of vehicle production at home.

The yen’s benefits were most visible in Toyota’s earnings from Japan, the company’s biggest export base. Operating profit from its home country more than doubled to about 374 billion yen, beating the 363.3 billion-yen average estimate of analysts surveyed by Bloomberg.

The automaker is also getting a short-term boost in Japan as consumers rush to buy cars before an increase in the consumption tax in April, according to Koji Endo, an auto analyst at Advanced Research Japan in Tokyo.

Via Bloomberg