TOKYO-- Toyota Motor Corp. forecast a third straight year of
record profit, but its president said the auto maker is entering a
phase of slower, more stable growth as he shifts its focus to
long-term profitability.
The world's best-selling auto maker said Friday net profit grew
19% to a record Yen2.17 trillion ($18.08 billion) for its fiscal
year ended March, largely on a weaker yen, as well as strong sales
of sport-utility vehicles in the U.S.
That is the largest net profit ever for a Japanese company,
according to Koji Endo, an auto analyst at Advanced Research Japan
and puts Toyota way ahead of its rivals. For the second straight
year, Toyota's full-year net profit was larger than the combined
net profits of Volkswagen AG and General Motors Co.
But the pace of growth is slowing: Toyota expects to post
Yen2.25 trillion in net profit for the current fiscal year, up just
3.5%.
Toyota's slowdown is a natural result of President Akio Toyoda's
focus on longer-term growth.
"This year is going to be a major turning point for Toyota on
whether it can take a steady step toward stable growth or whether
it will go back to its old ways," said Mr. Toyoda, who has turned
Toyota around from a loss six years ago, the first in its 70-year
history, at a briefing.
Mr. Toyoda, the 59-year-old grandson of the auto maker's
founder, has repeatedly warned that an overly rapid expansion for
Toyota could lead it down the same path it took in the early 2000s,
before the global financial crisis and its net loss.
Despite its record profit run, Toyota was until last fiscal year
undergoing what Mr. Toyoda characterized as a "willful pause" on
expansion. The company froze investments in new plants and focused
financial and human resources on developing technologies related to
vehicle architecture and manufacturing.
Toyota's investment into revamping its vehicle platforms and
architecture will gradually start to bear fruit, Mr. Toyoda said
Friday.
Last month, Toyota lifted the three-year freeze, saying it will
pay $1.4 billion to build a new plant in Mexico and expand an
existing plant in China. The expansions will start to come into
effect in 2018.
In March, Toyota unveiled details about new vehicle platforms
that use more common components and new manufacturing technologies
that helps slash costs.
The first vehicle fully built under the new process, set to be
released this fiscal year, is expected to be the redesigned Prius
gas-electric hybrid.
A major contributing factor in Toyota's record profits has been
the yen's weakening over the last two years. But the currency
landscape is gradually changing for Toyota and other Japanese auto
makers.
The yen remains weak against the U.S. dollar, but it has been on
the rise against other currencies such as the euro and the
Australian dollar. Also, the U.S. dollar has been strengthening
against the Mexican peso, the Canadian dollar and Brazilian real.
That is unfavorable for Toyota since many of operational costs in
these countries are denominated in U.S. dollars.
For the fiscal year ended March, Toyota's operating profit rose
Yen458 billion year-to-year, and currency moves accounted for
Yen280 billion of that, though other factors were also involved.
For this year, currency moves are expected to reduce operating
profit by Yen45 billion from last year, Toyota said, though cost
cuts and marketing efforts may mitigate the impact.
For the current fiscal year, Toyota said it expects to sell
10.15 million vehicles together with group companies Daihatsu Motor
Co. and Hino Motors Ltd., falling short of the 10.168 million
vehicles it sold last fiscal year.
Backed by record profit, Toyota said it is boosting its dividend
and will also buy back shares.
For the fiscal year ended March, Toyota plans to pay Yen200 in
dividend per share, up from the Yen165 per share it paid a year
earlier, keeping its dividend payout ratio--the percentage of net
profit distributed to shareholders--at nearly 30%.
For the current fiscal year, Toyota plans to buy back up to 40
million of its own shares for as much as Yen300 billion. The move
helps concentrate ownership stakes for holders of the remaining
shares, but the planned amount is smaller than last year, when it
said it would repurchase shares valued at as much as Yen360
billion.
"We intend to continue paying dividends stably and sustainably,
while flexibly considering share buybacks," Mr. Toyoda said.
Earlier Friday, Fuji Heavy Industries Ltd., the maker of Subaru
cars, said it could raise its dividend payout ratio up to 40% from
the current 20%. Fuji Heavy, which is 16.5%-owned by Toyota, posted
its third straight year of record profit and vehicle sales, and
forecast net profit will rise 29% this fiscal year to Yen337
billion.
Eric Pfanner contributed to this article.
Write to Yoko Kubota at yoko.kubota@wsj.com
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