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Japan automakers step on profit accelerator

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The Camry and Corolla maker, which last year overtook General Motors to regain the title of world’s biggest automaker, said things would get even better

Toyota this week said profit in its fiscal year to March more than tripled to $9.5 billion. (AFP Photo)

Toyota this week said profit in its fiscal year to March more than tripled to $9.5 billion. (AFP Photo)

By Peter Brieger (AFP) – TOKYO — Japan’s automakers have wrapped up the latest earnings season on a high note, booking mostly healthy profits as a weak yen, cost-cutting and strong demand in the US and Asia inflated their bottom line.

The results cement a recovery after the quake-tsunami disaster two years ago devastated sales and production, although a more recent diplomatic dispute between Tokyo and Beijing — and subsequent boycott of Japanese products — weighed on sales in China, the world’s biggest vehicle market.

The dispute was particularly tough on Nissan, which said Friday its annual net profit barely moved from a year earlier as its exposure to recession-riddled Europe also slammed the brakes on growth.

By contrast, Toyota this week said profit in its fiscal year to March more than tripled to 962.1 billion yen ($9.5 billion).

The Camry and Corolla maker, which last year overtook General Motors to regain the title of world’s biggest automaker, said things would get even better and it was expecting a net profit of 1.37 trillion yen for the fiscal year ending March 2014.

Honda, Japan’s third-biggest automaker, said its net profit jumped nearly 75 percent to 367.15 billion yen over the fiscal year.

Smaller carmakers including Mitsubishi and Suzuki rolled out rosy results as well, citing strong growth in emerging markets and a weakening yen, which boosts automakers’ competitiveness overseas and inflates the value of repatriated foreign income.

The dollar surged past 100-yen on Thursday, to levels last seen more than four years ago, with many observers pointing to further yen weakness, as Tokyo’s policy prescription of big spending and aggressive central bank easing to boost the limp economy helps depress the currency.

“The upbeat trend in Japan’s auto sector is nearly 100 percent due to the yen’s decline,” said Tatsuya Mizuno, auto analyst with Mizuno Credit Advisory.

“As long as that continues, automakers should see positive results for the current fiscal year. But there are several uncertainties, including the negative impact of Japan-China relations… The situation appears calmer, but nothing has fundamentally changed.”

The long-standing dispute flared again in September when Tokyo nationalised some of a chain of East China Sea islands also claimed by Beijing, sparking huge demonstrations across China and the damaging boycott.

Germany’s Volkswagen and US-based General Motors have tried to capitalise on their Japanese competitors’ troubles in the country, but Toyota and Honda both say their sales in China were returning to normal.

Nissan — the most exposed to China among the trio with about one-quarter of its sales in the country — said its April China results were better than a year earlier, but conceded it had lost market share.

“We are working hard to recover from the impact of the island dispute,” Nissan Chief Executive Carlos Ghosn said Friday.

“I consider the recovery achieved completely when our market share will come back to what it was before” the dispute flared.

Ghosn also applauded Japanese Prime Minister Shinzo Abe’s efforts to boost the world’s third-largest economy, dubbed “Abenomics”, saying Nissan had been “begging” for a cheaper yen for years.

The country’s automakers loudly complained when the dollar hit a record low around 75 against the yen in late 2011, playing havoc with their finances as they shifted more Japanese production overseas to cope with the strong unit.

“Companies are starting to build up more production, people are starting to invest again, the stock market is up, foreign companies are more interested in Japan,” Ghosn said.

Despite the expiry of an eco-friendly vehicle subsidy, Japanese automakers are also eyeing a pickup in domestic demand as Tokyo starts hiking sales taxes with a plan to double them to 10 percent over the next couple of years.


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