Toyota

Toyota and Honda beat earnings estimates but warn of prolonged chip crunch

Toyota and Honda beat earnings estimates but warn of prolonged chip crunch

  • Toyota suspended production at a Guangzhou production line
  • Honda suspended production in Wuhan on August 3
  • Toyota maintains full-year car sales and profit outlook
  • Honda raises full-year forecast by 18%, cuts car sales forecast

TOKYO, Aug 4 (Reuters) – Toyota Motor Corp (7203.T) posted record quarterly profit and Honda Motor Co (7267.T) raised its full-year profit forecast on Wednesday as post-lockdown sales surged, but the pair joined other automakers in warning that the global chip shortage will persist.

A resurgence in COVID-19 cases has disrupted parts supply and production at automakers, worsening a months-long pandemic-fueled chip shortage. Read more

Both Japanese automakers are facing production problems in China, which on Wednesday reported the highest number of new locally transmitted COVID-19 cases since January.

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Honda executive vice president Seiji Kuraishi told reporters the company suspended production at its Wuhan plant on August 3 due to a cluster of COVID-19 cases that developed at a supplier. . He added that the shutdown should not last long.

Toyota has suspended production at an assembly line in Guangzhou that it operates with its Chinese partner Guangzhou Automobile Group Co Ltd (601238.SS), a person familiar with the matter told Reuters on Wednesday.

The person, who declined to be named for privacy reasons, could not say when the suspension began, how long it would last, or which models were affected.

Also in Thailand, Toyota, the world’s largest automaker by sales volume, had to halt production last month at three plants due to a pandemic-related parts shortage. Read more

Still, the company stuck to its forecast of selling 8.7 million cars in the year ending March 2022 and said first-quarter sales volumes had returned to near 2019 levels.

Shares of Toyota fell 2% and closed 0.9% lower as some investors were disappointed the company did not raise its profit forecast despite beating a market estimate in the first quarter.

Honda, Japan’s second-largest automaker by sales, lowered its sales volume outlook to 4.85 million vehicles from 5 million, but raised its full-year forecast after hitting an operating profit in first quarter which was double analysts’ expectations. Read more

“We have revised down our sales volume outlook due to the resurgence of COVID globally, but centered on Asia, as well as the impact of the chip shortage,” Kuraishi told reporters.

“Nevertheless, we have decided to revise our operating profit forecast for the current year upwards … as we believe that we can absorb these negative effects by continuing to reduce costs.”

Toyota also said cost reductions are helping.

CHIP SHORTAGE

“Despite all the headwinds – from chip shortages to a resurgence of COVID in Southeast Asia, to slowing demand growth in China, as well as a sharp rise in material costs – this was a strong quarter,” said Masayuki Kubota, Rakuten. Chief Strategist of Securities Inc, referring to Toyota.

Toyota may revise its outlook for the year after the first half, he added.

The company’s operating profit soared to 997.49 billion yen ($9.15 billion) for the three months ended June 30 from the pandemic-hit first quarter of last year, topping the average analyst estimate of 752 billion yen.

Toyota has weathered the chip crisis better than its rivals thanks to its much larger chip inventory.

The Japanese company benefited from a business continuity plan drawn up in the wake of the 2011 Fukushima earthquake that required suppliers to stockpile chips, Reuters reported in March. Read more

The global shortage of semiconductor chips will cost automakers $110 billion in lost revenue this year, consultancy AlixPartners said in May. Read more

BMW (BMWG.DE) and Stellantis (STLA.MI) warned on Tuesday that the shortage will extend into next year, hitting production and sales even as auto demand soars in markets such as the United States. Read more

On Tuesday, General Motors Co (GM.N) announced that it would close several North American factories due to the shortage. Read more

($1 = 109.0400 yen)

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Reporting by Maki Shiraki in Tokyo and Norihiko Shirouzu in Beijing; Written by Jamie Freed; Editing by Kirsten Donovan Muralikumar Anantharaman and Sayantani Ghosh

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