Toyota hikes profit forecast 54%, shrugs off global chip supply issues

Toyota has enough chips to cover its targets, at least for now

TOKYO — Toyota said Wednesday it has a stockpile of chips that could last as long as four months, and was not immediately expecting a global chip shortage to hit production, as it jacked up its full-year earnings forecast by a bigger-than-expected 54%.

Unlike other automakers, including Japanese peers Nissan and Honda, that have had to cut production because of semiconductor shortages, Toyota raised output for the fiscal year ending March.

Shares in Toyota, the world's biggest automaker by vehicle sales, closed up 1.7% after hitting their highest level since July 2015.

"For the near term, we do not see any decrease in production volume due to the chip shortage, but we do see risks of a chip shortage," Chief Financial Officer Kenta Kon said during a briefing.

Kon said Toyota had heard chip shortages globally might continue until the summer, though the situation might resolve itself earlier.

Asked about why the automaker is seeing limited impact compared with competitors, Kon said Toyota has been constantly providing its short-term and long-term production volume plans to suppliers.

The automobile industry has been grappling with a chip shortage since the end of last year, which has in some cases been exacerbated by the former U.S. administration's sanctions on Chinese chip factories.

Taiwan's TSMC says it is trying to prioritize automotive applications as much as possible in its current silicon production to mitigate the shortage, but demand from consumer sectors is equally high as the industry comes off of COVID-related production shortages. 

But the maker of the RAV4 crossover and Prius hybrid said it expects to sell 9.73 million vehicles this year, up 3.3% from a previous forecast of 9.42 million yet still down from last year's 10.46 million.

"The fact that Toyota isn't largely affected by the chip shortage now is an encouraging catalyst," said Hideyuki Suzuki, a general manager of investment research at SBI Securities.

For the fiscal year ending March 31, Toyota now expects record operating profit of 2 trillion yen ($19.13 billion), far higher than an earlier projection of 1.3 trillion yen, and well above an average 1.542 trillion yen profit forecast based on estimates from 23 analysts, Refinitiv data showed.

The automaker now expects the yen to trade at 105 yen against the U.S. dollar, versus a previous forecast of 106 yen.

Toyota said operating profit rose to 987.9 billion yen in the three months ended Dec. 31 versus an average 565.51 billion yen profit from nine analysts surveyed by Refinitiv SmartEstimate.


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