Toyota Motor Corporation Q4 FY2022 earnings call

• Masahiro Yamamoto highlighted financial results despite production constraints from COVID-19 and semiconductor shortages, noting revenue and profit growth due to cost reduction and marketing efforts. He discussed regional operating income increases, business in China, and financial services performance.
• Kenta Kon talked about the improvement in profit structure over 13 years, comparing operating income during the global financial crisis and COVID-19, and the shift to in-house company systems and Toyota New Global Architecture (TNGA) to enhance profitability. He also mentioned the reduction in break-even volume and continued efforts to improve profit structure.

Consolidated vehicle sales for the period ended March 2022 were 8.23 million units, which was 107.6% of the previous fiscal year. Toyota and Lexus brand vehicle sales were 9.512 million units, 104.7% of the previous year. The ratio of electrified vehicles was 28.4%. Consolidated sales revenue was JPY 31,379.5 billion, operating income was JPY 2,995.6 billion, income before income taxes was JPY 3,990.5 billion, and net income was JPY 2,850.1 billion. Factors impacting operating income included foreign exchange rates, cost reduction efforts, marketing efforts, and expense increases.

• Forecast for fiscal year ending March 31, 2023: Consolidated vehicle sales expected 8,850,000 units (107.5% of previous year), Toyota and Lexus brand sales 9,900,000 units (104.1% of previous year), electrified vehicles sales 3,700,000 units (113.6% of previous year) with a ratio of 31.0%.
• Full-year consolidated financial performance forecast: Sales revenue JPY 33 trillion, operating income JPY 2,400 billion, income before income taxes JPY 3,130 billion, and net income JPY 2,260 billion. Factors impacting operating income included foreign exchange rates, cost reduction efforts, marketing efforts, and expense increases.

• Production constraints due to COVID-19, semiconductor shortages, and Chinese zero-COVID policy affecting production.
• Soaring raw material and logistics costs impacting operating income.
• Ukraine situation affecting business in Russia and global market conditions, including potential recession and inflation impacts.

Q: How do you assess the financial results of the fiscal year just ended and the potential for cost reduction?

A: Kenta Kon discussed accumulated efforts over 13 years improving profit structure, ongoing cost reduction efforts, and considerations for passing on higher costs to prices.

Q: What is the impact of the Chinese zero-COVID policy on production?

A: Masahiro Yamamoto talked about safety and quality prioritization in production planning, considering semiconductor supply and COVID impact.

Q: How does Toyota assess and support Hino Motor's misconduct issue?

A: Kenta Kon mentioned supporting Hino to restore stakeholder confidence as a parent company.

Q: How will Toyota maintain cost competitiveness in electrification?

A: Masahiko Maeda discussed continuing efforts to maintain cost competitiveness through operating structure improvements and software integration.

Q: What is the status of Toyota's business in Russia and pricing in the Japanese market?

A: Masahiro Yamamoto discussed ongoing consideration of Russia business and challenges in passing higher costs in deflationary Japan.

Q: Concerns about US market affordability and hybrid sales outlook?

A: Kenta Kon talked about providing product options and leasing, and expected hybrid sales growth due to rising fuel prices.

Q: Outlook for BEV demand and executive structure change?

A: Masahiko Maeda discussed BEV market acceleration and Kenta Kon talked about executive structure change for faster decision-making