Toyota Earnings: Volume Growth and Weak Yen Drive Massive Profit Growth

Toyota posted excellent fiscal 2024 second-quarter results and we are leaving our fair value estimate in place. Total revenue increased 24.0% year over year and operating income rose by 2.6 times while operating margin increased 650 basis points to 12.6%. A weaker yen at JPY145/dollar versus JPY 138/dollar in the prior year's quarter contributed over half the JPY 145 billion currency benefit to earnings, while massive improvements in volume, mix, and other marketing efforts contributed JPY 690 billion of the operating income increase. Toyota is operating at record production levels as demand remains strong while it recovers from fiscal 2023 chip shortage and other supply chain problems, all of which significantly drives scale. EPS of JPY 94.51 easily beat the JPY 65.14 Refinitiv consensus.