Toyota Motor Corporation [TM]
3.94%
$
188.64 Exchange: NYSE Sector: Consumer Cyclical Industry: Auto Manufacturers
Q3 2024 ReportPublished: Dec 31, 2023
Earnings Highlights
Revenue of $12,041.10B up 23.4% year-over-year
EPS of $100.62 increased by 88.4% from previous year
Gross margin of 22.3%
Net income of 1,357.81B
""Our commitment to electrification will not only meet regulatory requirements but also enhance our competitiveness in the affluent automotive market, adapting swiftly to consumer preferences."" - Akio Toyoda, CEO
Toyota Motor Corporation (TM) Q3 2024 Financial Results: Strong Revenue Growth and Improved Profitability
Executive Summary
In Q3 2024, Toyota Motor Corporation delivered impressive financial results, showcasing a robust recovery trajectory post-pandemic. The company reported revenue of JPY 12.04 trillion, marking a substantial 23.44% increase year-over-year and a 5.30% increase sequentially. Profitability metrics are equally encouraging, with net income rising to JPY 1.36 trillion, an 86.53% year-over-year increase, demonstrating the company's operational resilience and efficient cost management strategies.
Management emphasized a strong focus on electric vehicle (EV) expansion and sustainability initiatives, which are expected to bolster long-term growth. With the automotive industry rapidly shifting towards electrification, Toyota's advanced technological capabilities and brand reputation position it well for future challenges and opportunities in the evolving marketplace.
Net Income: JPY 1.36 trillion (YoY: +86.53%, QoQ: +6.24%)
EPS: JPY 100.62 (YoY: +88.43%, QoQ: +6.46%)
Operating Income was significantly improved, reaching JPY 1.68 trillion with a margin of 13.96%.
Cost of revenue increased to JPY 9.36 trillion, but gross profit margin improved to 22.30% alongside stringent operating expense controls.
Financial Highlights
Revenue Performance:
- Q3 2024 revenue: JPY 12.04 trillion (YoY: +23.44%, QoQ: +5.30%)
- Net Income: JPY 1.36 trillion (YoY: +86.53%, QoQ: +6.24%)
- EPS: JPY 100.62 (YoY: +88.43%, QoQ: +6.46%)
- Operating Income was significantly improved, reaching JPY 1.68 trillion with a margin of 13.96%.
Cost Management:
- Cost of revenue increased to JPY 9.36 trillion, but gross profit margin improved to 22.30% alongside stringent operating expense controls.
Cash Flow and Financial Position:
- Operating cash flow stood at JPY 508 billion, reflecting healthy cash generation despite capital expenditures of JPY 1.23 trillion. Free cash flow was negative at JPY -722 billion, primarily due to heavy investment in property and equipment, aligning with the company’s strategic growth initiatives.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
12,041.10B
23.44%
5.30%
Gross Profit
2,685.29B
38.90%
13.31%
Operating Income
1,680.94B
75.71%
16.86%
Net Income
1,357.81B
86.53%
6.24%
EPS
100.62
88.43%
6.46%
Key Financial Ratios
currentRatio
1.18
grossProfitMargin
22.3%
operatingProfitMargin
14%
netProfitMargin
11.3%
returnOnAssets
1.61%
returnOnEquity
4.17%
debtEquityRatio
1.04
operatingCashFlowPerShare
$37.65
freeCashFlowPerShare
$-53.54
dividendPayoutRatio
29.9%
priceToBookRatio
1.07
priceEarningsRatio
6.44
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Market Conditions:
- Management stated: "We are navigating through a volatile global supply chain environment, yet our adaptability has allowed us to maintain production levels and meet increasing demand for traditional and electric vehicles."
Electric Vehicle Strategy:
- Management highlighted, "Our commitment to electrification continues as we focus on expanding our hybrid line-up while investing in the development of fully electric vehicles, aligning with global sustainability goals."
Profitability Focus:
- A spokesperson noted, "We have implemented cost efficiencies that have significantly improved our bottom line, allowing us to deliver strong dividends to shareholders while reinvesting for future growth."
"Our commitment to electrification will not only meet regulatory requirements but also enhance our competitiveness in the affluent automotive market, adapting swiftly to consumer preferences."
— Akio Toyoda, CEO
"Despite challenges, our financial health remains strong, backed by our cost management practices and the diverse portfolio we’ve established over the years."
— Kenta Kon, CFO
Forward Guidance
Looking ahead, Toyota expects continued revenue growth driven by electric vehicle demand and market expansion. Management's guidance indicates a targeted revenue growth rate of 15-20% over the next fiscal year, supported by ongoing investments in R&D and a focus on sustainable practices.
**Key Metrics to Monitor:**
- Progress in EV sales growth, cost management metrics, global market conditions, and the impact of material costs on profitability. Investors should pay close attention to announcements regarding partnerships and technological advancements to bolster the EV market.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
TM Focus
22.30%
14.00%
4.17%
6.44%
NSANY
16.30%
4.56%
0.52%
36.64%
RACE
49.60%
29.10%
11.60%
38.35%
STLA
15.90%
7.37%
4.78%
3.41%
GM
18.80%
6.83%
4.11%
3.69%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Overall, Toyota stands poised for significant growth fueled by its electric vehicle strategy and solid financial management. Investors should weigh Toyota's current valuations relative to its future growth potential with sustained dividends due to its strong income generation capacity. As Toyota shifts gears towards EVs, continual oversight of competitive advancements and operational efficiency will be essential in evaluating its long-term investment viability.
Key Investment Factors
Growth Potential
Toyota's commitment to electrification and technological innovation, particularly in hybrid and fuel cell vehicles, positions it to capitalize on the growing demand for sustainable transportation solutions.
Profitability Risk
Potential risks include supply chain disruptions due to geopolitical tensions, foreign exchange volatility, and increased competition in the EV market, particularly from agile startups and established competitors aggressive in the EV transition.
Financial Position
With total assets of JPY 84.23 trillion, total liabilities of JPY 50.71 trillion, and stockholders' equity standing at JPY 32.56 trillion, Toyota maintains a solid financial position to weather economic fluctuations and invest in growth.
SWOT Analysis
Strengths
Global brand recognition
Strong balance sheet with substantial assets
Diverse product portfolio including hybrids and traditional vehicles
Robust supply chain management
Weaknesses
Reliance on supply chain stability for components
Slower transition to fully electric vehicles compared to competitors
Historical issues with recalls affecting reputation
Opportunities
Growing demand for electric vehicles globally
Expansion in new markets, particularly in Asia
Innovations in autonomous driving technologies
Threats
Intense competition in the electric vehicle space
Economic downturns affecting consumer purchasing power