By Kevin Buckland and Nao Sano
Toyota Motor shares jumped the most in more than seven months after the carmaker announced a shares buyback and gave a profit guidance that assuaged concerns about a slowing US market and stronger yen weighing on earnings.
The world’s most valuable carmaker plans to buy back up to 300bn yen (€2.27bn) of shares. The company’s 2.3tn-yen operating profit forecast also exceeded average analyst estimate.
Chief executive Akio Toyoda is accelerating cost reductions, trying to shore up the company’s coffers to prepare for a shift toward electrification and autonomous driving.
Even as growth sputters in the US, where the carmaker sells a quarter of its vehicles, it is managing to ward off competition with demand for the RAV4 sport utility vehicle and updated Camry sedan.
“The outlook for the year was a positive surprise,” said Koji Endo, an analyst at SBI Securities.
“It’s much more aggressive than expected and seems like Toyota has shifted from its conservative forecasts,” the analyst said.
While China is on track to become the biggest market for Nissan and Honda, Toyota sells only half as many vehicles there as in the US.
Toyota said it sees growth coming from Asia this year and that means China.
Sales at its Japanese, north American and European units are all expected to decline, the company projected.
Toyota shares jumped almost 4% in Tokyo trading, helping it erase declines for the year.
The company has also gradually been increasing sales in China, lessening its reliance on a US market where rising incentive spending is weighing on margins.
Additions to the model lineup could provide a boon to Toyota later this year.
The company plans to release an all-new edition of the RAV4, its biggest-selling SUV in the US, and introduce the compact crossover C-HR in China, its first entry in the nation’s hottest segment.
The yen could continue to be a hindrance.
Exchange-rate changes will probably cut 230bn yen from operating profit this year, Toyota said.
After averaging a fairly steady 112 per dollar last year, Japan’s currency has strengthened to 109 in 2018 as the threat of a trade war between the US and China spurred demand for the yen as a safe haven.
Foreign-exchange analysts on average predict the yen to appreciate to 103 per dollar in 2019, and Toyota, as well as Honda, are forecasting an average of 105 yen for the current fiscal year.