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Toyota Motor Corp. |(TM-NYSE) |$120.38* | |

Note: This report contains substantially new material. Subsequent reports will have changes highlighted.

Reason for Report: 4Q13 Earnings Update with New Reports

Previous Edition: 3Q13 Earnings Update with New Reports, Apr 18, 2012.

Brokers’ Recommendations: Positive: 100.0% (1 firm); Neutral: 0% (0 firm) Negative: 0% (0) Prev. Ed.: 2; 0; 0

Brokers’ Target Price: $126.54 (1 firm) Brokers’ Avg. Expected Return: 5.1%

*Note: Though dated Jun 18, 2013; share price and broker material are as of June 17, 2013.

Portfolio Manager Executive Summary

Toyota Motor Corp. (Toyota or the company) is the largest automobile manufacturer in Japan and a leading automaker in the world. Its product portfolio consists of a full range of models from passenger cars, minivans and trucks as well as related parts and accessories.

Only one firm in the Digest Group covering the stock has assigned Positive rating and provided target price.

Positive or equivalent outlook (1/1 analyst or 100%) – The firm expects that U.S. light vehicle sales will perk up in the near future, creating an ideal operating environment for the U.S.-based vehicle manufacturers including Toyota Motors. This will help the company improve its financial results in the U.S. The firm is optimistic as Toyota is planning to introduce new car models in the emerging markets including Brazil, China, India and Indonesia in order to catch up with the leading automakers in the markets.

Jun 18, 2013

Overview

Toyota Motor Corp. (Toyota or the company) was founded in 1937, and is headquartered in Toyota City, Aichi in Japan. It engages in the design, manufacture, assembly, and sale of passenger cars, recreational and sport-utility vehicles, minivans and trucks, and related parts and accessories. The company offers hybrid vehicles, primarily under the Prius brand, which run on a combination of gasoline and electric power. Toyota’s three businesses are Automotive, Financial Services, and All Other. More information on the company is available at: .

Key investment considerations as identified by the brokerage firms are as follows:

|Key Positive Arguments |Key Negative Arguments |

|Introduction of new models: Regular introduction of new vehicles and |Earthquake in Japan: Toyota has been suffering from disruptions in |

|variants of existing models by the company result in higher average |supply of parts caused by the earthquake and tsunami in Japan on Mar |

|realization per vehicle (ARPV), which in turn leads to strong revenue |11, 2011. |

|growth. |Slowdown in the major regions: Toyota's two largest markets are North |

|Efficient Production Systems: Toyota is one of the most efficient auto |America and Japan. Therefore, a slowdown in these economies is |

|manufacturers in the world, aided by the Toyota Production System |expected to adversely impact its growth. |

|methodology. |Political Conflict in China: Political conflict between Beijing and |

|Hybrid Offering: With Toyota and Lexus brands of vehicles as well as |Tokyo over disputed islands in the East China Sea is adversely |

|the Prius hybrids, Toyota occupies the leading position in the hybrid |affecting Japanese automakers’ sales in China, one of the largest |

|cars market. |markets of Toyota. |

|Expansion in emerging markets: Toyota is also expanding its footprint |Series of Recall: A series of recalls have damaged Toyota’s reputation.|

|in the emerging markets to improve its sales figures. The automaker | |

|plans to launch 8 compact car models in the emerging markets of Brazil,| |

|China, India and Indonesia by 2015. | |

NOTE: The company’s fiscal references end on March 31.

Jun 18, 2013

Long-Term Growth

According to management, Toyota expects to regain its market share with the recovery in world economy. The Japanese economy is also expected to show recovery trends.

Toyota enjoys the leading position in hybrid offerings. From 1997 to December last year, the automaker has sold more than 3.4 million hybrid vehicles. It expects to launch 21 gas-electric hybrid models by 2015, most of them being similar to its widely acclaimed Prius. Toyota also plans to offer fuel-sipping options across its entire line- up by 2020. The automaker dominates the hybrid market with its Toyota and Lexus offerings as well as the Prius hybrids, introduced in 1997. These apart, Toyota plans to launch a fuel cell vehicle by 2015, which runs on hydrogen to produce electricity.

To fight the current macroeconomic environment, Toyota aggressively pursues cost reduction measures, such as production cutbacks/suspension and downsizing of temporary workers.

Toyota is banking on the emerging markets, including Asia, for its sales growth. The automaker plans to introduce eight compact car models in the emerging markets including Brazil, China, India and Indonesia by 2015 in order to catch up with the leading automakers in those markets. The company aims to boost its sales in the emerging markets to 50% of global sales from 45% in 2011 and 18.6% in 2000. This is a part of its target to achieve annual sales of more than 1 million vehicles by 2015 in over 100 countries. The price of the new models will start from about ¥1 million ($12,600). The company plans to manufacture them mainly in Brazil, China and India by procuring 100% of the car components locally at low costs. As a result, the company intends to strengthen research and development activities in those markets.

Jun 18, 2013

Target Price/Valuation

Provided below is a summary of target price/valuation as compiled by Zacks Digest:

|Rating Distribution |

|Positive |100.0% |

|Neutral |0.0% |

|Negative |0.0% |

|Avg. Target Price |$126.54 |

|Digest High |$127.00 |

|Digest Low |$127.00 |

|Upside from Current |5.1% ↓ |

|Maximum Upside from Current |5.5% ↓ |

|Minimum Downside from Current |5.5% ↓ |

|No. of Analysts with Target Price/Total |1/1 |

Risks to the target prices include, but are not limited to, delays in production, sluggish growth in China due to the political conflict, contraction in sales volumes in the U.S. and Europe, unfavorable material price trends, and emergence of any major product-quality issues and regulatory acts.

Recent Events

On May 8, 2013, Toyota announced its 4Q13 earnings results. Highlights are as follows:

• Total revenue was ¥5.84 trillion ($63.4 billion) versus ¥5.70 trillion in 4Q12

• Operating income was ¥502.3 billion ($5.5 billion) versus ¥238.5 billion in 4Q12

• Net income was ¥313.9 billion ($3.4 billion) compared with ¥121.0 billion in 4Q12

Revenue

Toyota reported total revenue of ¥5.84 trillion ($63.4 billion) in 4Q13, up 2.4% from ¥5.70 trillion in 4QFY12. The increase in revenues was driven by higher revenues in regions including North America, Europe and Asia, partially offset by decline in revenues in Japan.

Consolidated revenues in FY13 escalated 18.7% to ¥22.06 trillion ($239.8 billion) on a 20.7% rise in unit sales to 8.87 million units. Unit sales rose 10.0% in Japan, 31.9% in Europe, 0.1% in Europe, 26.9% in Asia and 27.8% in Other reporting regions.

Revenues by Regions:

Revenues from Japan decreased 1.5% to ¥3.4 trillion ($37.4 billion) in 4Q13. Revenues from North America went up 19.7% to ¥1.7 trillion ($18.6 billion) in 4Q13. Revenues from Europe improved 11.3% to ¥565.1 billion ($6.1 billion) in 4Q13. Revenues from Asia increased 1% to ¥1.1 trillion ($12.1 billion) in 4Q13. Revenues from Other locations increased 11.6% to ¥530.3 billion ($5.8 billion) in 4Q13.

Total vehicle sales decreased 4.9% to 2.24 million units from 2.36 units in the corresponding quarter last year. Vehicle sales declined 14.4% to 611 thousand units in Japan. Vehicle sales in North America were 603 thousand units compared with 604 thousand units a year ago. In Europe, vehicle sales dropped 10.1% to 196 thousand units; in Asia sales slashed 3.9% to 416 thousand units. In other regions (including Central and South America, Oceania and Africa) vehicles sales climbed 13.9% to 230 thousand units.

Revenues by Segments:

Revenues from Automobile segment increased 2.3% to ¥5.4 trillion ($58.7 billion) in 4Q13.

Revenues from Financial Services segment increased 18.7% to ¥322.8 billion ($3.5 billion) in 4Q13.

Revenues from All other segment decreased 6.8% to ¥308.4 billion ($3.4 billion) in 4Q13.

Guidance

For FY14 ending Mar 31, 2014, Toyota projected consolidated vehicles sales to increase 229,000 units to 9.1 million units due to an increase in vehicle sales outside Japan. Consequently, the company expects consolidated revenues to increase 6.5% to ¥23.5 trillion.

Outlook

The firm believes that recovery in auto production will lead to sustainability in the sales volume of Toyota. The automaker continues to play a pivotal role in the global market for environment-friendly vehicles and benefits from its cost reduction measures. The firm expects that introduction of new models will also lead to a rise in sales in the U.S. Toyota is also banking on the emerging markets, including Asia, for its sales growth.

Margins

The company had an operating income of ¥502.3 billion ($5.5 billion) that more than doubled from ¥238.5 billion in the year-ago quarter. In fiscal 2013, operating income increased nearly fourfold to ¥1.32 trillion ($14.4 billion) from ¥355.6 billion in FY12.

Toyota’s cost of goods sold (COGS) increased to ¥20.7 trillion ($225.5 billion) in FY13, from ¥18.2 trillion in FY12.

Segmental Breakdown

Automobile: Operating income increased significantly to ¥402.9 billion ($4.4 billion) from ¥174.5 billion a year ago. Operating income in FY13 increased significantly to ¥944.7 billion ($10.3 billion) from ¥21.6 billion a year ago. The increase in operating income was mainly attributable to increases in production volume and vehicle unit sales as well as positive impact of cost reduction measures.

Financial Services: Operating income improved 39.1% to ¥72.2 billion ($784.8 million) from ¥51.9 billion in the year-ago quarter. FY13 operating income rose 3.1% to ¥315.8 billion ($3.4 billion). The improvement in operating income was caused by higher financing volume.

All Other: Operating income dropped 16.5% to ¥15.7 billion ($170.6 million) from ¥18.8 billion in fiscal 2012. Operating income for FY13 grew 27.5% to ¥53.6 billion ($582.6 million).

Guidance

Toyota expects FY14 operating income to rise 36.3% to ¥1.80 trillion.

Outlook

According to the bullish firm, the cost cutting measures will improve the profit margins. The firm believes that Toyota would regain the top position by increasing its dependence on the non-U.S. markets, especially the high growth emerging markets.

Earnings per Share

Net income of the company was ¥313.9 billion ($3.4 billion) in 4Q13, significantly up from ¥121.0 billion a year ago.

Toyota Motor posted earnings of ¥962.16 billion ($10.5 billion) or ¥303.78 ($3.3) per share in fiscal year ended Mar 31, 2013, reflecting more than threefold increase from ¥283.56 billion or ¥90.20 per share in the prior fiscal year.

The improvement in FY13 profits was attributable to positive impacts from marketing activities of ¥650.0 billion ($7.1 billion), cost reduction activities of ¥450.0 billion ($4.9 billion) and currency fluctuations of ¥150.0 billion ($1.6 billion), partially offset by negative impact from related expenses of ¥300.0 billion ($3.3 billion).

Guidance

For FY14, Toyota expects net earnings to go up 42.4% to ¥1.37 trillion compared with FY14.

Outlook

The firm foresees a positive earnings trend given the growth in sales and improvement in margins. The automaker continues to play a pivotal role in the global market for environment-friendly vehicles and introduction of new car models.

| | |

– The Online Stock Research Community

Discover what other investors are saying about Toyota Motor Corp., Ltd. (TM) at:

TM profile on

|Analyst |Kamalika Sinha |

|Copy Editor |Gourab Das |

|Content Ed. |Souvik Guha |

|Lead Analyst |Souvik Guha |

|QCA |Anindya Barman |

|No. of brokers reported/Total |1/1 |

|brokers | |

|Reason for Update |Earnings |

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Jun 18, 2013

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