Toyota Earnings: Weak Yen Against the Dollar Continues to Help Offset Expensive Raw Material Costs

We are not changing our fair value estimate after Toyota reported fourth-quarter and full-year fiscal 2023 results ending March 31. We will reassess all valuation inputs once we roll the model forward a year for the 20-F filing, which we expect in late June. Total company fourth-quarter revenue increased 19.4% year over year to nearly JPY 9.7 trillion, while operating income rose by 35.2% and margin by 80 basis points to 6.5%. Foreign exchange benefit was again the key profit growth driver, contributing JPY 235 billion in operating income growth including JPY 160 billion from the yen weakening against the U.S. dollar by nearly 14%. Excluding the foreign exchange translation benefit and various small items, operating income declined by JPY 80 billion as JPY 85 billion in cost reductions could not offset a JPY 435 billion raw materials cost increase plus other negative variances such as JPY 70 billion for higher research and labor costs. Materials net of cost reduction efforts for the full fiscal year took JPY 1.29 trillion from operating profit.