Cost Cuts, Emerging Markets Drive Toyota Profit

Here in the US, you’d think Toyota would be a bad investment, based on its perpetual recalls. But the automaker made $2.2 billion in profit last quarter, thanks to cost-cutting measures and strong sales in emerging markets. From the Detroit Free Press:

(Toyota’s) strong results come despite higher incentive costs in the U.S. and the negative impact of a strong yen.

A strong yen makes vehicles Japanese-assembled vehicles more expensive in overseas markets and shrinks the yen value of profits earned outside the home market. The dollar has been selling this week at about 85 yen, the Japanese currency’s highest value against the dollar in eight months.

Toyota more than offset the negative currency impact – estimated at 30 billion yen, or $353 million — 50 billion yen ($588 million) in cost cuts, including deferring some investments in factories and other projects that it will have to spend on later this year, said Takuo Sasaki, a managing officer.

But the strong quarterly profit was driven by Toyota’s growth in emerging markets such as China and that it a series of quality recalls in the U.S. have not hurt its performance.

Toyota managed to convert last year’s $187 million lost into a $1.27 billion operating profit in North America, despite more than 8 million recalls, writes the Free Press. Toyota is proving that it can still manage finances, even with a floundering reputation.