TOKYO (Reuters) - Toyota Motor Corp reported a 7.5 percent rise in quarterly profit as it sold more cars in fast-growth emerging markets from China to Russia, but it kept a cautious outlook due to a weak U.S. auto market and a firmer yen.
Toyota, the world's most profitable automaker, has seen its momentum stall in the United States as the economy slows, and said its current quarter earnings were likely to fall due to a sharp decline in the dollar.
"The company is taking a cautious view for two main reasons: the possibility of the U.S. economy falling into recession, which will hurt consumption, and the stronger yen," said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.
But growth in oil-rich regions and other developing markets, along with strong sales of its higher-margin Lexus luxury sedans and the fuel-efficient Prius hybrid as oil hit $100 a barrel, helped Toyota boost third-quarter earnings.
October-December net profit at Toyota, valued at $196 billion -- about 12 times the market capitalization of General Motors Corp -- was 458.7 billion yen ($4.3 billion), slightly higher than an average estimate of 455.4 billion yen from six brokers surveyed by Reuters Estimates.
Operating profit, which excludes earnings made by Toyota's Chinese joint ventures, grew 4.7 percent to 601.6 billion yen, although unfavorable currency swings shaved off 20 billion yen. Revenue grew 9.2 percent to 6.71 trillion yen.
For the full year to end-March, Toyota kept its forecasts for net profit of 1.7 trillion yen and operating profit of 2.3 trillion yen -- record results for a seventh straight year.
Consensus forecasts from 22 brokerages call for net profit of 1.82 trillion yen and operating profit of 2.46 trillion yen.
STRONG YEN WEIGHS
Senior Managing Director Takeshi Suzuki predicted profits in the current fourth quarter would fall from last year due to an assumed 14-yen drop in the dollar, but said Toyota's fundamental ability to expand profits remained intact.
"We're determined to meet our annual targets, even with the tough currency. I don't see this as a sign of a decline in Toyota's profit power," he told reporters.
Domestic rival Honda Motor Co raised its profit forecast last week, but Nissan Motor Co warned the weak dollar and U.S. woes would make for a tough 2008.
Toyota announced share buybacks worth up to 120 billion yen and plans to cancel 4.5 percent of its outstanding stock -- the first time in almost six years that it is eliminating part of its sizeable treasury stock -- to make better use of its capital.
Toyota will keep roughly 300 million of its own shares and cancel anything above that level, Suzuki said.
GROWTH ENGINE TO CONTINUE
Toyota opened a new factory in Russia late last year, and is adding capacity in Thailand, Brazil, China and Canada.
Global sales for the third quarter rose 5.3 percent to 2.3 million vehicles, helped by growth in all markets except North America. Sales in Japan were flat.
As proof of Toyota's success in spreading its regional portfolio, Suzuki said North America now accounted for 44 percent of total operating profit for the first three quarters, down from 57 percent a year earlier.
Toyota is the world's biggest carmaker by sales, having overtaken GM in 2006. GM, which includes in its tally cars built by a minority-held Chinese joint venture, says it still holds the top spot by a few thousand vehicles.
For the full business year, Toyota kept its global vehicle sales forecast unchanged at 8.93 million vehicles, but adjusted the projections by region, cutting expectations for mature North America, European and Japan markets, but raising figures for Asia and other regions.
The company also aims to speed up cost cuts by working with suppliers to design vehicle components and systems more efficiently under its "Value Innovation" project -- fruits of which will first appear in a remodeled Crown sedan this month.
Share prices of Japan's top three automakers have dropped over the past year as investors shunned companies with a big exposure to the United States.
Shares of Toyota lost 25 percent in the year to Monday, leading a 23 percent fall in Tokyo's transport sub-index ITEQP. over the same period. Honda shed 24 percent and Nissan dropped 28 percent.
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