Wary of chip shortage, Toyota and Honda earns record profits

Tokyo: Toyota Motor Corp (7203.T) made a record quarterly profit on Wednesday and Honda Motor Co (7267.T) increased its annual profit estimate as sales hit by pandemics recovered but the car manufacturers see no end in view of the global disk shortage. The two leading automakers in Japan have joined an army of global automakers, including BMW (BMWG.DE) and Stellantis (STLA.MI), to warn that the shortage of chips is likely to continue as the automatic demand for the lock in markets such as the United States. Toyota shares fell 2% on Wednesday, extending losses from the morning session, and some investors were disappointed that the company did not lift its profit guidance. According to analysts interviewed by Refinitiv, the world's largest automaker has set its forecast for May at an operating profit of 2.5 trillion yen ($ 22.93 billion) in the current fiscal year. Honda made an operating profit in the first quarter that was double expectations of analysts and increased its forecast for the full year by 18% to an operating profit of 780 billion yen in the current financial year based on strong sales. Both carmakers have warned that a global shortage of chips and increasing cases of COVID-19 outweigh their prospects, although Honda said its forecast boosted its savings efforts. Toyota said it also benefits from a cost-improvement program. "We will continue these activities in the future, but the situation remains unpredictable due to the expansion of COVID-19 in emerging countries, semiconductor shortages and rising material prices," Toyota said in a statement. Toyota's operating profit rose to 997.49 billion yen ($ 9.15 billion) for the three months ended June 30 from the first quarter of last year, which was hit by the pandemic, and was higher than the average estimate of analysts of 752 billion yen. Profit for the last quarter was also boosted by favorable currency movements. Toyota maintains its forecast for 8.7 million vehicle sales in the current financial year, compared to 7.65 million last year. Sales volumes in the first quarter recovered to nearly 2019, and the ratio of electrified vehicles rose, an investor submission said. Honda, Japan's number 2 carmaker, has lowered its car sales forecast for the full year to 4.85 million vehicles from 5 million previously due to the shortage of chips. It sold 4.55 million vehicles last year. DISCOUNTS Toyota has amassed semiconductors used in everything from engine maintenance to car safety and entertainment systems, amid a global shortage of inventory that has hit production among competitors such as Hyundai Motor Co (005380.KS) and Ford Motor Co (FN). It benefited from a business continuity plan developed in the wake of the 2011 earthquake in Fukushima, which required suppliers to store two to six months' worth of chips, depending on the time it takes from order to delivery, reports in March. The global shortage of semiconductor chips is costing automakers $ 110 billion in lost revenue, consulting firm AlixPartners said in May. General Motors Co (GM.N) said Tuesday that it will close several factories in North America due to the shortage, including three next week. Toyota also did not remain unharmed. It experienced production problems in Thailand, where it halted vehicle production at three of its manufacturing facilities last month due to a pandemic-related component. Honda said its China sales rose only slightly in the first quarter due to the impact of the disc deficit. The carmaker suspended production at its Wuhan, China plant on August 3 due to a COVID-19 case that developed at one of its parts suppliers, its executive vice president, Seiji Kuraishi, told reporters, although he said that the interruption is not expected to last long. ($ 1 = 109,0400 yen)

Wary of chip shortage, Toyota and Honda earns record profits

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