Toyota plans share buyback and expansion as US, China sales rise

Toyota rose 0.8 per cent to 8279 yen at the close of trading in Tokyo on Friday, before the earnings announcement. Photo / NZME.

Toyota forecasts profit will surpass last year's record and says it plans to buy back shares as the carmaker resumes its global expansion amid rising sales in the United States and China.

Net income will probably rise to 2.25 trillion yen ($18.8 billion) in the fiscal year ending March from the previous year's 2.17 trillion yen, the company said.

The projection trailed the 2.43 trillion yen average of 27 analyst estimates compiled by Bloomberg. Toyota said it's buying back up to 1.27 per cent of its shares and president Akio Toyoda is ending a period he's described as an intentional pause by building car factories in Mexico and China before the end of the decade.

Since he banned adding new assembly plants in 2013, Toyota has boosted efficiency, revamped crucial models such as the Camry sedan and put its Lexus brand back in contention for the US luxury-market crown.

"If you just look at the numbers, the impression is quite negative - it's very conservative," said Mitsushige Akino, executive officer at Ichiyoshi Asset Management. "I think there's a good chance they will revise up the numbers simply because the forecast is overall very conservative."

Toyota rose 0.8 per cent to 8279 yen at the close of trading in Tokyo on Friday, before the earnings announcement. The shares have gained 9.5 per cent this year, trailing the 13 per cent advance by Japan's benchmark Topix index.

Toyoda said the company will continue to pay dividends "stably and sustainably, while flexibly considering share buybacks" to reward shareholders. The company said on April 28 that it will offer as much as 500 billion yen of a new type of stock with a five-year trading lock-up and protection against loss of principal to attract buy-and-hold individuals.

The company continues to fend off Volkswagen to remain the world's top-selling automaker, leading by about 100,000 vehicles through the first three months of 2015.

It maintained an edge despite reporting a 2.5 per cent sales decline from a year earlier, while Volkswagen posted a 1.8 per cent gain. Falling sales in Japan - by 14 per cent in the first quarter of this year - are forcing Toyota to look elsewhere for growth to sustain its lead.

Last month, Toyota said it will spend about $1.4 billion to build factories in Mexico and China, which will boost production capacity by about 300,000 vehicles by 2019. The company also said it's working with its other joint-venture partner in China to further ramp up output.

Toyota is facing a production capacity crunch in North America.

- Bloomberg