TOYOTA MOTOR CORPORATION (NYSE:TM) Q2 2020 Earnings Conference Call - Final Transcript

Nov 07, 2019 • 08:30 am ET

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TOYOTA MOTOR CORPORATION (NYSE:TM) Q2 2020 Earnings Conference Call - Final Transcript

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Operator
Kenta Kon

equity-method affiliates in China as well as our financial services business using Slide seven. As for our China business despite increased vehicle sales, operating income of consolidated subsidiaries decreased by JPY12.2 billion year-on-year to JPY78.5 billion, mainly due to the depreciation of the Chinese yuan. Equity in earnings of equity method affiliates was up JPY3.5 billion year-on-year to JPY61.5 billion largely thanks to marketing efforts. Regarding financial services, operating income was up JPY41.5 billion year-on-year to JPY215.6 billion and this was mainly due to an increase in the lending balance and a decrease in costs related to residual value losses.

And next please look at the Slide eight on shareholder returns, with regard to the interim dividend on common stock, we plan to make it JPY100 per share, the same amount as the last fiscal year. Regarding the full-year dividend, we will strive for the stable and continuous payment of dividends considering a consolidated payout ratio of 30%.

Please turn to Slide nine. With regard to the interim shareholder return we also plan to buyback up to JPY200 billion reduced by JPY50 billion compared to the interim period of the previous fiscal year. We deem the benefit of shareholders as one of the priority management policies and continue to enhance corporate value. We intend to continue to flexibly exercise share repurchases with the purpose of promoting capital efficiency, while actively investing in our growth areas, notably case.

Now, I would like to move on to discuss the outlook for the full fiscal year ending March 2020, with regard to our consolidated vehicle sales we have reduced the forecast from the time of our Q1 results by 50,000 units to 8.95 million units. We anticipate the vehicle sales in Japan, where the market is solid will increase by 30,000 units, as well as in other regions by 20,000 units, while vehicle sales in Asia will decreased by 100,000 units. Considering market deterioration in countries such as India and Indonesia.

Please turn to Slide 11, we have adopted ForEx rate assumptions for October onwards of -- JPY105 per dollar and JPY150 per euro which makes the full-year assumptions JPY107 per dollar and JPY118 per euro. Based on this our forecast for full-year consolidated financial performance are: Net revenue of JPY29,500.0 billion; operating income of JPY2,400.0 billion; pretax income of JPY2,630.0 billion; net income of JPY2,150.0 billion. We have maintained our operating income forecast, which was announced in our Q1 results.

Please see Slide 12, for an analysis of our latest operating income forecast in comparison to our previous forecast at the time of our Q1 results, compared year-on-year, we anticipate a JPY67.5 billion decrease in operating income. Currently, we are in a phase of transforming ourselves to a mobility company and proactively undertaking investments for the future and creating friends. Furthermore, in order to have a corporate structure that can promote such transformation, we are striving to pursue TPS and refining costs at all levels, which -- with all members of Toyota