Toyota Motor Corporation Ltd (TM, Financial) recently revealed its fourth quarter results for fiscal 2015 with revenues that surpassed the consensus estimate. Toyota’s consolidated net income for the quarter came in at $3.75 billion, significantly higher than the prior-year quarter’s net income of $2.88 billion, while revenues climbed 8.4% year-over-year to $59.82 billion, comfortably beating the consensus estimate of $56.69 billion. Following the results, Toyota shares rose 3.4% to $142.34 during the day’s trading before closing at $142.12.
North America Leads in Unit Sales Growth
During the fourth quarter of fiscal 2015, Toyota saw a 4.3% year-over-year decline in global unit sales to 2.23 million vehicles, with sales slumping 13.5% in Japan to 626,933 units and dropping by 11.5% in the Asia region to 361,000 units. The company also saw a 1.2% drop in sales to 414,000 units in its other regions including the Middle East, Africa, Oceania and South and Central America. On the upside however, Toyota’s sales grew 5.2% to 225,000 units in the European marketplace, while in North America, the company sold 607,000 vehicles, up 7.1% compared to the prior-year quarter. The company also logged operating income of $5.34 billion for Q4 2015, compared the $4.23 billion in the prior-year quarter.
Segment wise, Toyota saw a 7.5% year-over-year growth in revenues to $54.6 billion in the automotive segment, with operating income improving to $4.48 billion, up 69.4% in the year-ago quarter. At its Financial Services segment, the company saw 21% growth in revenues to $3.75 billion during the quarter. However, operating income at the segment fell 18.6% year-over-year to $644.54 million. Concurrently, Toyota’s other businesses saw revenues growing 9.5% year-over-year to $3.36 billion, while operating income declined 3.5% to $188.24 million.
For the full fiscal 2015, Toyota reported net income of $19.7 billion or EPS of $12.5 per ADR (American Depository Receipt), improving substantially from the previous fiscal’s net income of $18.2 billion or $11.50 a share. The company’s consolidated revenues for FY2015 came in at $247.5 billion, up from $233.5 billion in fiscal 2014 and beating the consensus estimate of $224.43 billion.
Outlook for FY2016
Following the results, the world’s top-selling automaker also revealed its outlook for the new fiscal 2016. The company projected consolidated revenues of $239.1 billion for FY2016, reflecting a 1% improvement from FY2015. Operating income is expected to come in at $24.3 billion, up 1.8% year-over-year, while net earnings are expected grow 3.5% year-over-year to around $19.6 billion, translating to $12.43 per ADR. Toyota, which competes with Ford Motor Co (F, Financial), General Motors Company (GM, Financial) and Honda Motor Company Ltd (HMC, Financial) in the Automobile Manufacturing market, also projected consolidated unit sales of around 8.9 million vehicles for FY2016, down from 8.97 million vehicles in FY2015. Consensus estimates peg Toyota’s Q1 2016 earnings at $2.98 a share while EPS for the full fiscal 2016 is expected to be $12.42 per ADR.
Final Thoughts
Toyota reported strong revenue and earnings growth for Q4 2015 as well as the full fiscal 2015, with robust sales in North America and the positive impact of the strong dollar offsetting the significant weakness in unit sales in Japan and Asia. Despite a year-over-year decline in global vehicle sales in the fourth quarter, the company logged growth in operating income. Moreover, Toyota offered a positive outlook for fiscal 2016, expecting year-over-year growth in revenues and operating income despite an anticipated decline in vehicle sales. Experts are looking at an average annual earnings growth rate of 7% for Toyota over the next five years. The Toyota stock currently carries a ‘hold’ guidance.
