Toyota Motor Corporation (JP:7203) (TM) today reported a 20% year-over-year decline in its Q2 operating profit to ¥1.16 trillion. The decline was mainly due to weaker sales in key markets like North America and China. Additionally, the drop reflects a comparison against record-high sales in 2023, when the automaker gained momentum by focusing on hybrid vehicles over fully electric ones. The drop also marked Toyota’s first profit decline in two years.
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Nonetheless, Toyota shares in Japan rose 1.72%, as the operating profit was still in line with the ¥1.2 trillion profit estimate from LSEG (London Stock Exchange Group) analysts.
Toyota’s Performance Hit by Quality, Certification Woes
Toyota’s performance during the second quarter was also impacted by production halts due to a certification scandal and recalls. Earlier in June, the company issued an apology for extensive cheating on certification tests affecting seven vehicle models, leading to a suspension in production for three of them.
In Q2, Toyota sold 2.3 million vehicles globally as compared to 2.4 million units a year ago. Meanwhile, quarterly sales revenue edged up slightly to ¥11.44 trillion from ¥11.43 trillion in the comparable quarter of the prior year.
Looking ahead, Toyota maintained its annual sales revenue guidance at ¥46.00 trillion. However, it lowered its vehicle sales forecast for FY24 to 10.85 million units from the previous estimate of 10.95 million units.
Are Toyota Shares a Good Buy?
On TipRanks, 7203 stock has received a Moderate Buy rating based on seven recommendations by analysts, including four Buys. The Toyota share price target of ¥3,028.57 implies a growth of 15% in the share price.
