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Toyota ADRs are up after the auto maker posted better-than-expected first-quarter numbers, and offered a solid outlook for the coming year.
Spencer Platt/Getty Images
Most global auto makers have reported first-quarter results, and conventional-car makers have an edge on electric-vehicle firms. The latest reports from the likes of Toyota Motor simply look better than those of Tesla, the EV standard-bearer.
Wednesday, Toyota (ticker: TM) reported first-quarter operating profit of $4.6 billion on sales of almost $72 billion. Wall Street was looking for operating profit of $3.6 billion on sales of $67 billion, respectively. It’s a strong beat, partly helped by a weaker Japanese yen. Operating profit surged from $3.6 billion in the year-ago quarter.
In sharp contrast to Toyota, Tesla’s (TSLA) first-quarter operating profit of $2.7 billion collapsed from $3.6 billion a year ago. Price cuts for Tesla EVs around the globe helped demand, but hurt profitability.
Looking ahead, Toyota expects fiscal 2024 profit to hit about $22 billion, up from a little more than $20 billion generated in fiscal 2023. (Toyota’s fiscal year ends in March.)
Higher production is the main reason for improving results. Toyota expects total vehicle production to hit 10.1 million units in fiscal 2024, up from 9.1 million in the just-ended fiscal year.
Toyota is looking to outshine peers. Ford Motor’s (F) guidance calls for 2023 operating profit of about $10 billion, down from about $10.4 billion in 2022. General Motors (GM) expects 2023 operating profit of about $12 billion, down from $14.5 billion.
Tesla doesn’t provide full-year guidance. Wall Street estimates for 2023 operating profit for the EV giant are currently at $11.6 billion, down from $13.7 billion reported in 2022.
Following results, Toyota’s U.S.-listed American depositary receipts, or ADRs, are up about 0.8% in Wednesday trading. The
S&P 500
and
Dow Jones Industrial Average
are down about 0.1% and 0.2%, respectively.
Coming into Wednesday trading, Toyota ADRs are down about 15% over the past 12 months. Rising interest rates and declining vehicle affordability have sapped some investor enthusiasm for the sector. Ford and GM shares are down about 11% and 14%, respectively, over the past 12 months, while the S&P 500 is up about 3% over the same span.
Shares of traditional auto makers have lagged behind the market, but they still outstrip the performance of shares of EV makers.
Rivian Automotive
(RIVN),
Lucid Group
(LCID),
Fisker
(FSR), and Tesla shares are down about 29%, 54%, 34%, and 37%, respectively, over the past 12 months.
EV makers are startups, so their shares are growth stocks, which typically don’t fare well in rising-rate environments. But there are also company-specific reasons for the underperformance. Rivian and Lucid have struggled to ramp up EV production. Fisker’s final approvals to sell its vehicles in Europe took longer than expected, leading to a reduction in 2023 projections. And Tesla, as mentioned, has cut prices to help boost demand.
Tesla is the largest seller of all-electric vehicles in the world, and its price cuts have impacted most EV makers around the globe.
In these tougher economic times. investors are more pumped up for the stability of profits from traditional-car makers than EV makers that leak money.
Write to Al Root at [email protected]
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