NAGOYA, Japan/TOKYO — Toyota Motor expects a consolidated operating profit of 2.55 trillion yen ($23 billion) in fiscal 2019, up 3% on the year, the company announced on Wednesday.
However, uncertainties in the U.S. and Chinese markets will likely push sales down 1% to 30 trillion yen. Toyota forecasts its net income in the fiscal year ending March 2020 will rise 19% to 2.25 trillion yen.
The Japanese automaker has yet to decide on the annual dividend. It paid out 220 yen per share in fiscal 2018.
While the company predicts a higher operating profit this fiscal year, the number came below the consensus market forecast for a 4% rise.
Toyota’s consolidated sales for fiscal 2018 rose 3% to 30.23 trillion yen, making it the first Japanese company to top the 30 trillion yen threshold.
“To sum it up, this has been a year where we pushed for a ‘full model change’ for the future of Toyota,” CEO Akio Toyoda told reporters in Tokyo the same day. “We were able to invest actively for the future, but we are still on the road to reforming our business culture,” Toyoda said.
The carmaker attributed the sales gain to cost-cutting and an aggressive sales drive over the past three years. Analysts will now focus on whether the company can maintain solid sales in the U.S. and China in a weaker overall market.
While Toyota maintained solid earnings in fiscal 2018, a contraction in the auto market in the U.S. and China led to sharply lower profits among other big automakers, including Germany’s Daimler and Ford of the U.S.
New model rollouts and a tighter grip on dealer incentives supported Toyota’s performance. The Toyota group’s global unit sales, including those of Daihatsu Motor, Hino Motors, and others, set a record in fiscal 2018, reaching 10.6 million cars, up 2% from the previous year. It expects sales to rise slightly this year, reaching 10.74 million vehicles.
The company is now focusing its sales push on China to gain ground on its rivals. Toyota lowered the price of its luxury Lexus brand, exported from Japan after the Chinese government slashed tariffs on imported cars last July. New models introduced in China include the Toyota C-HR crossover and the Lexus LS and ES.
To boost brand awareness, Toyota has increased the number of motor shows it participates in by 10% annually since 2012. It now takes part in nearly 200 engine shows a year in China.
Although China’s auto market contracted for the first time in 28 years in 2018, Toyota’s sales jumped 14% to about 1.48 million cars due to steady marketing efforts.
Toyota plans to release a new Corolla compact car this year and hopes to increase its total sales in China by 10% annually to around 1.6 million units in 2019 and about 1.76 million units by 2020.
The automaker also plans to build plants in Tianjin and Guangzhou to increase production capacity by about 35% versus current levels in 2021.
Although Toyota shares briefly jumped following the company’s announcement on Wednesday of a 300 billion yen stock buyback on May 15, they ended the day down 1%.