Toyota quarterly profits jump 11 per cent and it raises full-year forecast

Full-year operating earnings outlook raised by 4.3 per cent as Japanese car maker expects a boost from a weaker yen

Toyota cars at a showroom in Tokyo. The car maker raised its earnings forecast after reporting that its profit surged. AP

Toyota on Tuesday raised its forecast for full-year operating profit by 4.3 per cent as it expects a boost from a weaker yen, after ongoing sales growth in Asia and Europe lifted profit in the July-September quarter.

Japan's top car maker expects full-year profit to come in at ¥2.4 trillion (Dh77.78 billion), from a previous forecast of ¥2.3tn, based on a revised assumption that the yen will average around 110 to the US dollar through March.

The increase represents largely flat profit in the year to March versus last year.

Profit was ¥579.1bn for the July-September period, up 11 per cent for Toyota's strongest second-quarter performance since the September 2015 quarter, although it undershot a median forecast of ¥584.89bn from 10 analysts polled by Refinitiv.

Earnings were bolstered by higher sales in China, while profitability in most of its major markets including North America improved.

The results indicate that Toyota is managing to avoid a fall in sales in China just as its global rivals are starting to feel the pinch of stalling demand for cars in the world's biggest car market, as broader economic growth slows.

During the July-September quarter, it posted a 20 per cent jump in sales in China, which helped to lift overall sales in Asia by 9.2 per cent to 417,000 units during the period.

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Last week, Honda reported a slowdown in vehicle sales in Asia largely due to sluggishness in China, while Ford in late October posted a slide in third-quarter profit due in part to a sales slump in the country.

Toyota and its domestic rivals are facing the possible need to increase investment in North America, as Japan's car industry considers ways to increase localised production following the agreement on an updated trade pact between the United States, Canada and Mexico in September.

The industry is also bracing for likely higher US tariffs on imports from Japan, which could deliver a negative hit toToyota, as it imports nearly one-third of all of the vehicles it sells in the United States, its biggest market, from Japan.

Toyota's sales in North America eased a touch to 665,000 units, while they rose 4.8 per cent in Europe, resulting in a 1.9 per cent rise in sales globally.