Toyota Motor Corporation (NYSE: TM) reported fourth-quarter and fiscal 2016 results yesterday after market close. Japanese automaker opened at $101.99 (+3.6%) on Thursday in spite of weak earnings results and lower full year forecasts.
Toyota Motor Corporation reported a 2.1% drop in consolidated revenues to 6.97 trillion yen ($60.6 billion) in fourth-quarter fiscal 2016 compared to the same period of last year, missing Zacks Consensus Estimate of $63.1 billion. For FY2016, the company posted a 4.3 percent year to year increase in consolidated net revenues to 28.4 trillion yen (($236.7 billion), missing Zacks Consensus Estimate of $239.11 billion. Earnings per share in increased to 735.36 ($12.25) in fiscal 2016, also lagged Zacks Consensus Estimate of $12.91.
Consolidated vehicle unit sales in Japan and overseas decreased by 3.2% to 8,681 thousand units in FY2016 compared with FY2015. It is worth noting that the decrease in overseas vehicle unit sales expanded in North America despite the overall sales decline. In addition, the company forecasts a 35 percent drop in net income to 1.5 trillion yen for the fiscal year ending March 31, 2017, far short of average Thomson Reuters`s estimates of 2.25 trillion yen.
"We have benefited from an exchange rate tailwind that has helped raise our earnings above the level of our true capabilities," Toyota's President Akio Toyoda said, "Although this has enabled us to take on new challenges, that set of circumstances is likely to change for the worse this year."
The benefits of "exchange rate tailwind" boosted earnings from Japan-exported models` sold overseas, leading to four-straight years of record profit for Toyota. However, Foreign-exchange rate changes probably will reduce operating profit by about 935 billion in the following year. To against yen swings, the company is scheduled to build new plants outside Japan and to cut costs for new plants by its in-house global architecture system at the same time. As Akio has said in the financial statement, a robust financial foundation would be critical for Toyota to prepare for future challenges in advance.