Toyota Motor Corporation Q2 FY2023 earnings call

• Appreciation to customers, shareholders, etc., and apology for delivery delays. - Business environment challenges: foreign exchange, interest rates, material prices, semiconductor shortages, Shanghai lockdown, South Africa floods. - Revised vehicle production forecast to 9.2 million units due to semiconductor risks. - Full-year operating income forecast unchanged. - Interim dividend ¥25 per share, increase of ¥1; ¥150 billion set aside for share repurchase. - Regional operating income: Japan up ¥50.1 billion, North America down ¥332.1 billion, Europe down ¥106.5 billion, Asia up ¥62.8 billion.

Consolidated vehicle sales for the first half ended September 2022 were 4,159,000 units, which was 101.6% of the same period previous fiscal year. Toyota and Lexus vehicle sales were 4,742,000 units, 97.7% of same period previous fiscal year. Regional sales: sales volume decreased in developed countries due to production constraints but increased in Asia due to COVID recovery. Consolidated financial results: sales revenue ¥17,709.3 billion, operating income ¥1,141.4 billion, income before income taxes ¥1,834.2 billion, quarterly net income ¥1,171 billion. For the full year, forecasted sales revenue ¥36 trillion, operating income ¥2,400 billion, income before taxes ¥3,340 billion, net income ¥2,360 billion. Operating income factors: foreign exchange rates increased income by ¥565 billion, cost reduction decreased by ¥650 billion (largely material prices), marketing increased by ¥130 billion, expenses increased by ¥310 billion, swap valuation losses and Russia production costs negative impact ¥341 billion.

• Full-year consolidated financial forecast: sales revenue ¥36 trillion, operating income ¥2,400 billion, etc. - Revised vehicle production to 9.2 million units. - Factors impacting operating income: foreign exchange up ¥220 billion, cost reduction up ¥60 billion, marketing activities down ¥185 billion, swap valuation and Russia costs down ¥90 billion, keeping operating income forecast unchanged.

• Risks include semiconductor procurement, foreign exchange fluctuations, material price hikes, production constraints in various regions, swap valuation losses, and costs to terminate production in Russia.

Q: Assessment of financial results and reasons for production volume downward revision, especially semiconductor shortage impact and recovery measures A: Kenta Kon discussed financial results assessment noting challenging environment but maintaining profit; Yoshio Nakamura explained production plan revision background; Kazunari Kumakura detailed semiconductor supply situation and efforts Q: Soaring material prices, support for parts manufacturers/suppliers, and global economy outlook A: Kazunari Kumakura talked about supporting suppliers and price reflection measures; Jun Nagata discussed global economy outlook including regions like US, Europe, China, Asia Q: North America profit decrease reason and BEV strategy A: Masahiro Yamamoto explained North America profit decrease due to material prices; Jun Nagata detailed BEV strategy including regional carbon neutral efforts and existing BEV targets Q: Impact of weaker yen on business results and Russia production termination costs A: Kenta Kon discussed weaker yen impact on financials and suppliers; Masahiro Yamamoto explained Russia production termination costs and no major future additional costs Q: Chip issue, vehicle pricing A: Kazunari Kumakura talked about chip supply situation and monitoring; Jun Nagata explained vehicle pricing region-by-region considering inflation and market differences Q: Full year forecast upward revision, product mix impact, and manufacturing site return to Japan A: Masahiro Yamamoto explained sales revenue upward revision due to yen exchange rate; Kenta Kon discussed manufacturing site return challenges and regional competitiveness enhancement Q: Semiconductor impact on vehicle development and launch, chip shortage timeline A: Kazunari Kumakura said semiconductor/materials don't slow development but affect vehicle production and delivery; couldn't predict chip shortage end timeline Q: Material cost impact reduction, supplier support, and Japan production strategy A: Masahiro Yamamoto talked about material cost impact reduction and continued supplier support; Kenta Kon and Kazunari Kumakura discussed Japan production strategy and long-term supply chain protection