Tomahawk, WI 08/06/2014 (Basicsmedia) – Japanese giant automaker, Toyota Motor Corp (ADR) (NYSE:TM), reported a 5% increase in its second quarter profit. Motley Fool analyst, Jason Moser, in an interview on CNBC attributes strong sales in the U.S and some parts of Europe as the reason behind the increase in profit. Favorable exchange rates and cost cutting measures also worked to the company’s advantage. Weaknesses in some markets came down to the fact that Toyota is extremely big and operates in almost all the key markets in the world.
“A good performance in the united states, some performance in Europe, they helped pick the slack from the rest of the world. Toyota Motor Corp (ADR) (NYSE:TM) is the largest automaker in the world; we expect to see bigger results from the company. [….] When you have a company that is playing in every market as it does, it’s going to see weaknesses in some markets,” said Mr. Moser.
Markets like Thailand dragged it down in the quarter in terms of sales. The automobile sector continues to act like a cyclical play in the sense that when one market is down another one is always up, sure to offset any form of decline. A 2% topline growth is not robust for Toyota Motor Corp (ADR) (NYSE:TM), thus the reason behind the company initiating cost-cutting measures that are expected to improve its operating margins.
“It seems like automobiles are a cyclical market obviously so the advantage of having a global play like Toyota Motor Corp (ADR) (NYSE:TM) is when one market around the world is down another market may be up. I think we are seeing some headwinds here for the global auto industry, and I think Toyota shows that just through its topline growth of 2% is not all that robust. So they are working on trying to figure out ways to bring those costs back down,” said Mr. Moser.
Toyota Motor Corp (ADR) (NYSE:TM) has on the other hand resorted to being conservative in terms of reiterating its full year profit estimate as well as lowering the number of vehicles it expects to sell. The company expects to finish the year with global sales of 9.1 million vehicles, with a profit of $17.6 billion.