Toyota Motor Corporation Q4 FY2023 earnings call

Koji Sato addressed the Daihatsu procedure realities issue, stating independent retests confirmed no quality/safety issues, shipments resumed to some regions, and Toyota is investigating root causes. Yoichi Miyazaki highlighted financial results despite production constraints, exceeded forecast due to profit structure improvements. Dividend policy revised to increase dividends stably, year-end dividend JPY35 per share (increase of JPY7), total dividend JPY60 per share (increase of JPY8). Share repurchase up to JPY150 billion for year-end. Production volume forecast for next fiscal year 10.1 million units, sales volume expected to increase in all regions. Focus on carbon neutrality, product structure improvement, and growth investments. Return to shareholders with new dividend policy and flexible share repurchases.

Consolidated vehicle sales for the period ended March 2023 were 8,822,000 units, which was 107.2% of the previous fiscal year's sales. Toyota and Lexus brand vehicle sales were 9,610,000 units, 101% of the previous fiscal year. Electrified vehicles ratio was 29.6%. Sales revenue was JPY37,154.2 billion, operating income JPY2,725 billion, income before income taxes JPY3,668.7 billion, and net income JPY2,451.3 billion. Regionally, Japan operating income increased by JPY477 billion, North America decreased by JPY457.8 billion, Europe decreased by JPY115 billion, Asia increased by JPY55.7 billion, and other regions increased by JPY36.7 billion.

Forecast for fiscal year ended March 31, 2024: production volume 10.1 million units, sales volume 9,600,000 units for consolidated vehicles, 10,400,000 units for Toyota and Lexus brands. Electrified vehicle sales expected 3,843,000 units, ratio 37.0%. Full year financial forecast: sales revenue JPY38 trillion, operating income JPY3 trillion, income before income taxes JPY3,690 billion, net income JPY2,580 billion. Factors impacting operating income: foreign exchange rates decrease operating income by JPY875 billion, cost reduction increase profit by JPY360 billion, marketing activities increase operating income by JPY1,285 billion.

Risks include semiconductor supply constraints, natural disasters, COVID-19, material price fluctuations, and impact of production terminations in Russia. Also, challenges in achieving carbon neutrality and meeting diverse customer demands in evolving markets.

Q: How would you sum up the overall financial results and evaluate good points, areas below standard?

A: Koji Sato stated operating income of JPY2.7 trillion was achieved despite challenges, indicating ingenuity and efforts in manufacturing and supply chain. Financial results showed ability to strengthen financial progress through various efforts.

Q: What is your view on domestic production and communication with suppliers regarding electrification?

A: Koji Sato emphasized domestic production is a starting point, and with electrification, parts use changes, but communication with suppliers focuses on leveraging their strengths.

Q: Is production aiming for a record in current fiscal year and how to secure chips?

A: Yoichi Miyazaki said 10.1 million production forecast is feasible due to improved semiconductor supply visibility and production site efforts. Koji Sato added next-gen BEVs aim to reduce costs through manufacturing process changes.

Q: Stance on Chinese market and future prospects?

A: Yoichi Miyazaki mentioned Chinese business faced COVID and semiconductor issues but share increased, focusing on providing vehicles loved by Chinese customers. Hiroki Nakajima highlighted local development in China.

Q: On dividends, share repurchase, and BEV profitability?

A: Yoichi Miyazaki said dividend policy revised to focus on stable increases, share repurchase flexible based on price levels. Koji Sato discussed BEV profitability aiming for same level as current through cost reduction and value addition.

Q: On material costs, Tier 2/3 suppliers, and corporate governance?

A: Masahiro Yamamoto said TMC communicates with Tier 1 suppliers, working to protect supply chain. Jun Nagata discussed governance and culture, emphasizing genchi genbutsu to identify root causes and open communication.