On the afternoon of May 8, Tokyo time, Toyota CEO Tsuneji Sato presided over the earnings conference for the 2023 fiscal year (April 2023-March 2024). This is his first fiscal year earnings conference after taking office as the new president of Toyota, and it has a very special significance for both Toyota and Tsuneji Sato.
The performance was encouraging.
In particular, in terms of profit, Toyota's operating profit exceeded 5 trillion yen for the first time, setting a new record, and net profit more than doubled. This achievement has once again made Toyota the top global car company in terms of profitability, and it also exceeds the total profit of China's top 10 car companies.
In terms of new vehicle production and sales, the global sales of Toyota's parent company (Toyota and Lexus) increased by 7.3% year-on-year to 10.31 million units, and the cumulative production volume was 9.97 million units, a year-on-year increase of 9.2%, setting a new record.
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Let's take a look at a few sets of data:
In fiscal year 2023, Toyota's cumulative operating income reached 45.095 trillion yen (equivalent to 2.09 trillion yuan), a year-on-year increase of 21%.
operating profit was 5.353 trillion yen (equivalent to 249 billion yuan), exceeding 5 trillion yen for the first time, a year-on-year increase of 96%; Net profit reached 4.9 trillion yen (equivalent to 228.1 billion yuan), a year-on-year increase of 101%.
This data not only helped Toyota once again win the top profit of the global car company, with an operating profit of 5.353 trillion yen, which is more than Toyota's own 299.5 million yen in fiscal 2021 and 235 million yen in fiscal 2018 by SoftBank Group.
In Toyota's view, the reason why it can achieve a leapfrog profit breakthrough in fiscal 2023 is the result of "the right time, the right place and the right people".
In fiscal year 2020, the new crown peaked and sales declined; In fiscal 2021 and 2022, Toyota, like other automakers, was unable to achieve the desired results due to chip shortages, the impact of the pandemic has not yet fully dissipated, and high raw material prices.
However, in the past fiscal year 2023, the overall environment is very good, with no pressure on chip supply and no trouble with raw material procurement.
Of course, the increase in sales, the improvement of the model mix, and the price increase due to the optimization of vehicle functions are also the main reasons for the growth of operating profit.
In terms of production and sales, the global sales of Toyota's parent company (Toyota and Lexus) increased by 7.3% year-on-year to 10.31 million units, and the cumulative production volume was 9.97 million units, a year-on-year increase of 9.2%.
Among the sales performance of 10.31 million units, hybrid models are still the "handle" of Toyota's new car sales, with a volume of 4.47 million units, an increase of 24.5% year-on-year.
North America has long been Toyota's largest market, with Toyota selling 2.8 million new vehicles in North America over the past year, up from 2.4 million in fiscal 2022. Among them, the U.S. market has achieved outstanding results in hybrid models, which has become the main driving force for Toyota's global hybrid model growth.
Coming to "marathon mode"
In the face of expectations for fiscal 2024, Toyota is conservative. In the new fiscal year ending March 2025, Toyota's operating profit will fall 19.7% to 4.3 trillion yen, below the consensus estimate of 5.3 trillion yen.
The main reason is that Toyota has accelerated the implementation of forward-looking deployment, and Toyota plans to invest 380 billion yen in "human capital" in the new year to support the labor costs of suppliers and dealers, as well as invest in its "all-round" development strategy.
Toyota also said that total sales in fiscal 2024 may reach 10.95 million units, down slightly from 11 million units in fiscal 2023, but still expects hybrid sales to remain strong, with annual sales of hybrid models expected to be about 4.8 million units, essentially unchanged from fiscal 2023.
However, in addition to the above reasons explained by the official, the industry generally believes that the Dongying giant will also face the following problems on the road to rapid growth.
First, the scandals that have occurred in recent years.
In 2022, Hino Motors was exposed to engine exhaust emissions and falsified fuel consumption data. Japan's Commission of Inquiry found that Hino's fraud had been going on for at least 20 years, nearly 20 years.
In 2023, Daihatsu Automobile, a subsidiary of Toyota, was exposed to crash tests in violation of test procedures and data falsification. After investigation by a third-party committee, a total of 174 items were involved in false records in Daihatsu Automobile's documents.
This year, Toyota halted global shipments of 10 new cars due to the operation of inappropriate power and torque tests on engines supplied by Toyota Autonomous Loom.
Second, the sales growth is too strong.
In the face of the scandal, Toyota blamed part of the group's rapid growth in recent years, which has overwhelmed resources for product development and vehicle testing.
Toyota executives have told Japanese media that the company's performance in fiscal 2024 has intentionally slowed down after the company's sprint to record records in the past two years. Toyota will revisit its production rhythm and reset to "marathon mode".
Third, the challenges of the Chinese market.
The Chinese market is the largest single market for many international car companies, but at the moment of electrification transformation, it has turned around and become their weakness. Horizontally, Toyota's performance in the Chinese market is better than many of its Japanese counterparts, but it is still struggling to break through localization.
Fourth, the balance between electric and hybrid.
In fiscal year 2023, which ended March 31, Toyota sold a total of 116,000 pure electric vehicles, more than triple the sales of the previous year. However, compared to other global EV leaders, Toyota's sales volume is still small.
Currently, Toyota can cover up a lot of financial deficits due to the booming hybrid vehicle business. In the just-concluded fiscal year 2023, Toyota sold more than 3.7 million new hybrid vehicles, contributing a record 4.9 trillion yen (equivalent to 228.1 billion yuan) of operating profit to the group.
In China, Toyota is facing ferocious price war pressure, while in the U.S., consumers are grappling with higher borrowing costs.
However, Toyota will also usher in a positive one. As global demand for pure electric vehicles slows, Toyota can boost its profits by selling more hybrid models, which have relatively higher profit margins than conventional combustion engine vehicles.
On the same day that the earnings report was announced, Toyota said that it planned to allow employees aged 65~70 to continue to work in the company to alleviate the labor shortage. Currently, Toyota employees have the option to retire at age 60 or work with the company until age 65 at half their salary.
In addition, Toyota also hopes to revise the compensation structure of senior employees as soon as October 1 to achieve a more performance-oriented human resources system.