Toyota Earnings: Large Volume and Pricing Improvements Provide Massive Third-Quarter Earnings Boost

Toyota reported an excellent fiscal 2024 third quarter and raised guidance. EPS of JPY 100.62 rose by 88.4% year over year and beat the LSEG consensus of JPY 81.61. We are increasing our yen and U.S. dollar fair value estimates each by over 3% to JPY 3,000 per share and $200 per share to model higher profits for fiscal 2024 and fiscal 2025. For fiscal 2024 guidance, the company increased its operating income projection by 8.9% from prior guidance to JPY 4.9 trillion. Management’s increase comes from higher volume and pricing contributions than previously expected as well as cost reductions offsetting rising materials costs and continued contribution from a weak yen against the dollar and other currencies. We think the company can beat its full-year outlook because demand should remain robust and guidance now assumes a full-year exchange rate of JPY 143/USD 1 (JPY 141 previously), which is stronger than where the yen trades in early February at around JPY 148. The strong second half of the year profits, in our view, bodes well for the full-year dividend payout to be announced later this year.