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Toyota earnings up 27% despite recalls in U.S.

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Toyota earnings up 27% despite recalls in U.S.

Despite ongoing recalls in the U.S., Toyota posted a 27% increase in net revenue for its fiscal first quarter, and its recalls barely register on its financial reports.

The automaker posted a $2.2 billion profit for the April to June quarter, the company said Wednesday. Sales in emerging markets and cost-cutting helped offset lingering recall costs and strong foreign exchange rates.

The bump in revenue comes even after Toyota recalled nearly 10 million vehicles this year, and is facing multiple lawsuits in the U.S. over sudden acceleration claims in many of its vehicles.

Sales in North America were up 36%, despite the spate of recalls, but the cost of convincing consumers to buy vehicles is also soaring: Global marketing costs were up 400% in the quarter, the company said.

Toyota raised its profit forecast for the rest of the fiscal year, which ends in March 2011. The automaker now expects $3.97 billion in net revenue, up from a forecast of $3.62 billion. Still, foreign exchange volatility and the end of government stimulus programs in Japan could affect the earnings forecast, the company said.

"We note a lack of visibility concerning currency movements and the possible backlash in demand after the end of the demand-stimulus programs in Japan, which requires our close monitoring," said Takahiko Ijichi, Toyota's senior managing director. "Nevertheless, we will do our utmost to reach as many customers with as many vehicles as possible."



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