Toyota hikes annual forecast as first-half net profit doubles

Toyota ramped up its annual net profit forecast to $26.1 billion after reporting it more than doubled in the first six months of the year.

The world's biggest automaker by sales said that a weaker yen and cost-cutting efforts meant it now expects annual net profit of 3.95 trillion yen, a record if achieved, from a previous estimate of 2.58 trillion yen.

"The forecast has been revised upward from the previous forecast in light of the impact of exchange rate fluctuations as well as efforts to improve profitability," the company said in a statement on Wednesday.

For the six months to September, Toyota said net profit more than doubled to 2.59 trillion yen on sales of 21.98 trillion yen, which were up almost a quarter on the previous year.

Production has recovered significantly from a year ago, when the auto sector was hit by severe semiconductor and supply shortages.

Toyota said before the earnings announcement it saw record global production of 5.058 million units during the first half, when global sales reached 5.172 million vehicles.

Its strong results come as it makes a rapid shift towards electric vehicles, playing catchup with European and Chinese rivals that have made the shift already.

Toyota said on Tuesday it now plans a $13.9B investment in a battery plant in North Carolina in the United States, expanding a previous commitment to spend $5.9B.

"Toyota's production has been very strong, very smooth," Satoru Takada, auto analyst at Tokyo-based research and consulting firm TIW, told AFP news agency before the earnings announcement.

Shares in the firm closed up 4.71 percent after the release of the earnings report.

"These are figures for which we need to thank our customers" and staff, executive vice president Yoichi Miyazaki told a news conference.

But Toyota's profits in the Chinese market dropped mainly due to currency fluctuations and the increased sales cost of subsidiaries, while the volume of vehicle sales remained nearly flat.

Japanese carmakers have struggled in China, although Toyota has managed to stay popular there, Takada said.

"Unlike its rivals, Toyota's plug-in hybrid vehicles are doing well in China, where the company has so far avoided a sharp sales drop," TIW's Takada said.

On China, Miyazaki said "we have entered a very severe discounting and price competition, and we see that there is also a big discounting competition in the area of electric vehicles, mainly battery EVs".

Miyazaki said Toyota has managed to maintain its market share in China and will continue efforts to stay competitive there.

Toyota expected its sales volume to slip in China, Thailand and Vietnam, while North America should show continued strength.