Toyota Motor Corp (NYSE: TM) reported a record fiscal first quarter on Friday morning, but shares of TM stock traded flat because of investor concerns about the ongoing international trade war. Analysts say Toyota’s full-year guidance is telling, and upside for TM stock is likely limited for now.
Toyota reported first-quarter adjusted earnings per American depositary share of $3.98 on revenue of $66 billion. Both numbers modestly topped consensus analyst estimates of $3.94 and $65.3 billion, respectively. Revenue was a new first-quarter record for Toyota, up 4.5 percent from a year ago.
First-quarter net profit of $5.9 billion was also a record for Toyota. The company says strong sales in China and Europe drove its earnings beat, but it confirmed investor concerns over the trade war.
At a press conference in Tokyo, senior managing officer Masayoshi Shirayanagi said the trade war has created an “uncertain situation” and that the tariffs threatened by U.S. President Donald Trump would have an “enormously big” impact on Toyota’s U.S. business.
Toyota cut its full-year North American sales guidance by 500,000 vehicles to 2.75 million due to the uncertainty.
However, Shirayanagi said Toyota remains on track to meet its full-year global sales goals.
“When you look at the numbers for the reported quarter, we can say we are on course toward realizing our full-year targets, but in terms of earnings power and cost-cutting, we are still half way,” he said.
Toyota reported a 1 percent overall rise in global retail vehicle sales in the first quarter, driven by an 8.5 percent gain in Asia. Sales in China are now up 5.4 percent through the first six months of the year, and Thai sales are up 26 percent.
In North America, Toyota’s largest global market, sales were up 3.2 percent on the quarter. North American profit declined 29 percent due to pricing pressures from a weakening market.
Bank of America analyst Kei Nihonyanagi says Toyota’s quarter wasn’t good enough to ease investor concerns about the risks of a ramping trade war and a U.S. auto market slowdown.
“Given that the stock market expected a slight upward revision to [fiscal Q3 2019] guidance, we think…
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