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Can Toyota Maintain Its Traditional Fine Balance Through Electrification?



On May 8th, Toyota Motor Corporation (NYSE:TM) proved once again that it is holding steady as its President, Akio Toyoda, announced its financial results for the fiscal year ended March 31, 2019 and presented the steps ahead.

Toyota has managed to consistently outperform its rivals over the last year. The entire industry is struggling on so many fronts – from following new technology trends to rising costs and tariffs. Although Toyota’s shares dropped only 5 percent in the past year comparing to its peers which on average suffered a 10 percent drop, the company still needs to significantly cut costs and has a challenging way ahead as a complete redesign is bound to take place.

Financial Statements (FY2019)

Starting with key financial figures, Toyota’s automotive division’s operating income has risen 1.4 percent for the 2019 fiscal year. This is largely the result of cost savings. In fact, operating income in Japan has increased mainly as a result of cost reduction. The same goes for Europe due to an efficient expense reduction strategy. Still, executives made clear that the company didn’t reach its cost reduction targets and what was accomplished didn’t offset the costs of improving their products.

Toyota has maintained its expenses at around 4/5 of its net sales for the greater part of the last decade, but spending is bound to rise. There are no obvious catalysts for future growth to offset this unfavourable change so the executives have made it clear that they will do their best to cut their costs further, even when it comes to stationery. Consequently, Toyota has raised capital and R&D expenditure forecasts for the next fiscal year.

What about sales?

The company’s challenges are fully shown in the U.S where it is clearly struggling. After dropping every month since November, Toyota’s sales in the U.S. fell another 4.4 percent, which is very sharp compared to the overall market’s 1.7 per cent. Toyota reported a 4% drop in profit for January-March period after its vehicle sales dropped in North America. Toyota’s President said its quarterly profit was 459.5 billion yen which is a drop from 480.8 billion yen in the same period the previous year. But its profit was $4.2 billion which is a healthy company position. Not only that but the annual revenue of 30.2 trillion yen ($275 billion) was the first time a Japanese company has reported sales above 30 trillion yen ($273 billion).

The results for the fiscal year through March were reported to have been damaged by the absence of a U.S. tax break that boosted earnings in the previous fiscal year, and by investment losses. Yet, the maker of the Camry sedan, Prius hybrid and Lexus luxury models is projecting a profit of 2.25 trillion yen ($20 billion) for the fiscal year through March 2020. This is nearly 20%higher from FY 2019’s 1.88 trillion yen ($17 billion).

But luxury cars market has many potential setbacks, especially considering that the overall market is maturing and slowing down. In China, an Audi A3 is now in the same price range as a Toyota Camry. Toyota entered China’s automotive market rather late, and although the company has gained some market share, foreign luxury car makers have been lowering their prices and offering great incentives like zero-interest loans and replacement subsidies. If they continue dropping prices and getting so near to Toyota’s price range, big trouble is on the horizon, according to Morgan Stanley analysts.

So what’s in for Toyota?

Toyota has managed to strengthen its sense of unity through the hard times such as the global financial crisis. It has been guided by concepts of “sustainable growth” and “enhancement of competitiveness” when it ran into difficulties innovating when times were normal. As explained by its President, this ‘intentional pause’ was made to return Toyota to its core values, with a goal to “achieve production workplaces that had competitiveness rooted in the Toyota Production System (TPS), as well as to achieve ever-better car-making that had competitiveness based on the Toyota New Global Architecture (TNGA).” Today, Toyota is working devotedly to thoroughly eliminate “waste, unevenness, and overburden” in all areas of its functioning by strengthening TPS and refining costs.

Toyota is also headed to conquer the electric market. In January this year, it signed an agreement with Panasonic to set up a joint venture related to automotive prismatic batteries. Toyota is investing $1.64 billion to expand its new-energy car capacity. In the same month, TRI rolled-out P4 automated driving test vehicle and introduced Toyota Guardian (TM) autonomy at CES. In February,  “Monet”, self- driving joint venture with SoftBank was launched and  “Kinto”, a newly formed car-subscription company, started providing services. President Toyoda has stated his mission is to convert Toyota to a ‘mobility’ company “that provides mobility itself and all kinds of services related to mobility,”. The above actions clearly support this vision.

Just like Japan, which basically has no resources and cannot survive on its own, Toyota, as well, like any global company cannot survive alone and is very proud of its good global network. Going forward and “creating more friends” has been announced to become a key concept for Toyota as it enters the era of Electrification. New technologies will demand a reshaped infrastructure that even threatens the conventional business model of the automobile industry. Toyota’s executives are aware that this model might have worked for hybrid electric vehicles (HEVs), but it might not remain valid when it comes to FCEVs and BEVs. But Toyota will not be going at it alone, but will instead try to develop and evolve together with those who share the same aspirations. Rather than building up a wall around its patents, the company aims to make them open and increase the number of  its associates. The end goal is to create a new model that combines selling cars with systems that match customers’ needs. Toyota aims to transform conventional concepts and invent a model that will improve society as a whole. Cars are after all driven in the real world and support our daily lives.

All of these are good endeavours, but their returns are not guaranteed. As Toyota flies off to new ventures, it seems cash outflows will overshadow growth drivers for a while. Fortunately for Toyota, investors are still not showing any signs of pressure to see some growth drivers but seem to trust its Management. What remains certain is that while preparing for the next step, Toyota will not abandon its innate strengths that built its reputation in the first place.

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Toyota’s News: Redesigned Corolla, New Investments and Partnerships



Toyota Stock Market News

Toyota Motor Corporation (NYSE: TM) is managing something other automakers only dream of. The company is honouring its values while achieving sustainable growth for over a decade. The dependable Japanese giant continues to deliver on its promises as it prepares for an electric future.

A new sturdy yet sporty Corolla

On September 17th, the company announced a completely redesigned Corolla that now goes beyond just being a practical buying decision. The newly evolved Corolla has a sporty design, offering pleasurable driving and advanced safety equipment. Being built on Toyota New Global Architecture (TNGA), Corolla is ready to evolve to meet customers’ needs, according to Yasushi Ueda, chief engineer in charge of development.

Since its debut in 1966, this car is nothing less than adored by consumers all over the world and now, it will have its first hybrid version available to U.S. customers.

Hybrid strategy is actually paying off

Just like Honda Motor Co. (NYSE:HMC) with its 2020 CR-V Hybrid, Toyota is using its hybrid technology to position itself for future growth and transition to an all-electric future, despite the fact these energy saving vehicles do not qualify for government subsidies. But, this strategy is paying off as hybrid demand skyrocketed and the company proudly revealed in February that Lexus reached its 10 millionth vehicle sales milestone since its launch, with its 2018 sales performance achieving several ‘best-ever records’. And it is thanks to these figures that the Chinese government is also starting to see the potential of such vehicles so things can only get even better for Toyota. As the saying goes, persistence is the key to success and these two companies have been quite brave in sticking to HEVs.

New Investment – $391 Million Goes to Texas’ San Antonio Plant

This will be Toyota’s first expansion in nine years at the plant that produces its Tundra and Tacoma pickup trucks. It is the part of the company’s strategy to invest $13 billion in its U.S. operations over the period of five years, ending in 2021.

Future Investment – $243.29 million to Produce New Vehicle in Sao Paulo

Toyota is also about to get an even stronger presence in Brazil as it will hire 300 new employees at the Sorocaba Plant to start the production of a new vehicle.


And let’s not forget the ground-breaking partnership of Japan’s leading automakers that was revealed in August as Toyota and Suzuki Motor Co. (OTC: SZKMF) announced they will collaborate on developing autonomous car technology. This deal is cementing the bond that the two automakers kicked-off in 2016. They might seem like an odd couple as Suzuki is a everything but a big player, yet its strong presence in India is only one of the things that will greatly benefit Toyota. Although Suzuki admitted defeat on the world’s biggest playgrounds, China and the U.S., it cracked the code for emerging markets. And this is exactly where future global sales growth is expected to come from.

Inventing a car that will run forever?

According to Bloomberg, Toyota aims to go far further than electric by teaming up with Sharp Corporation (OTC:SHCAY) and Japanese governmental organization NEDO that encourages the development of innovative technologies. Considering that Toyota is a company that has even used the economic crisis and recession to only come out stronger, it’s not unlikely that it is set to out do the impossible by mixing the most efficient batteries with solar panels. The company’s strong financial performance and track record show that if anyone can do it, it’s Toyota Motor Co.


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Nike Exceeds Wall Street Expectations With Q1 Earnings for FY2020



Direct-to-consumer sales and digital momentum strategies did the trick for Nike

When Nike (NYSE:NKE) released its better-than-expected first quarter of the fiscal 2020 results late Tuesday. Naturally shares jumped more than 5% to reach $91.80. The reported revenue increased 7.2% year comparing to last year, achieving $10.7 billion, greater than the expected $10.44 billion. Net income soared more than 28%, making adjusted earnings per share $0.86, also smashing expectations of $0.70 per share.

Nike managed to achieve a turnaround

The biggest contributor to total sales was Nike’s North American segment that increased 4% comparing to last year. But China sales also continue to grow and by double digit percentages: 22% to be exact, topping $1.68 billion. Overall, these are fantastic news for investors. Especially since the company’s rare earnings miss for the final quarter of the previous fiscal year. The company attributed this to increased marketing costs and a higher tax rate. But highly anticipated new product launches and solid results for continuing lines, along with efforts to draw new customers to the Nike SNKRS app, did their magic.

Digital momentum is key

Digital movement is transforming and amplifying everything Nike does and in Q1, Nike Digital grew 42% on a currency neutral basis. This growth is driven by enhanced digital services and the international expansion of its app ecosystem. Moreover, The Nike app and SNKRS app are now both live in over 20 countries, with more expansion coming throughout the year.

There are literally no weak spots for investors

Arguably, there are no weak spots for prudent investors to dig in as far as this quarter’s report is concerned. The company is literally firing on all cylinders. The company’s management attributes these results to “the depth and balance of the company’s complete offense, building on the strengths of its foundational business drivers and capitalizing on the untapped dimensions of its portfolio”. Management has also dismissed any concerns that US-China trade conflicts could harm its operations, disclosing no impact has been seen up to date.

Nike showed it can even handle the increased tariffs

Earlier this year Nike joined over 200 other footwear companies urging President Trump not to increase tariffs on footwear imported from China, calling the move “catastrophic for our consumers, our companies, and the American economy as a whole.” But while those tariffs are certainly catastrophic for small players, Nike seems more than capable of mitigating the consequences of this added expense.

Poor macroeconomic conditions are only masking Nike’s true power

The company made it clear that its figures would have been even stronger had it not been for macroeconomic challenges which are manifesting through tariffs and foreign-exchange rates. They implied that the weakening economic climate is essentially masking Nike’s true strength. And in addition to children, women are also a big opportunity for the company that Nike will continue exploiting. This is why Nike expects better-than-planned growth in its higher-margin NIKE Direct channels and international segments and consequently, its full-year gross margin. One thing is for sure: Nike has turned itself into so much more than a ‘sneaker-company’.

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Apple Will Be Making Its MacBook Pros in the US



With a newly granted “federal product exclusion,” enabling it to import some Mac Pro parts without paying tariffs, Apple (NASDAQ: AAPL) will be able to save enough money to make US assembly worthwhile. The company announced on Monday that it will manufacture the new version of its Mac Pro desktop computer in Austin, Texas. It’s also a big political win for Apple, since President Trump has for years called on the company to make more products in the US. Tim Cook clearly made a compelling case during his meetings with President Trump. Apple described the decision to keep Mac Pro production in Austin as part of its “commitment to US economic growth.”

Macroeconomic climate is not favourable

The September figures around the world are simply awful. The uncertainty brought on by intensifying trade wars, the outlook for the car industry and Brexit are paralyzing investors, with September seeing some of the worst performance since the financial crisis in 2009, leading many to worry about whether yet another crisis is upon us. On a brighter note, Apple’s stock went up 0.2% after Bloomberg reported that ten of its 15 requests for an exemption from tariffs on imports from China had been approved.

New investments

Apple previously disclosed plans to spend $350 billion in the U.S. by 2023, a figure that includes new and existing investments. Its Apple TV+ is set to launch on November 1, with stars like Oprah Winfrey bringing her famed book club streaming show to the company’s subscription service. Among documentaries that will be released, there will even be a multi-series about mental health, featuring no other than Prince Harry himself. Apple’s subscription service will cost only $4.99 a month and will be available in 100 countries and regions at launch. Also, customers who buy a new Apple device will also get a free year of Apple TV+.


Netflix (NASDAQ: NFLX) is still the leader when it comes to U.S. streaming, along with Amazon Prime (NASDAQ:AMZN), AT&T’s HBO (NYSE: T) and upcoming Disney+ (NYSE:DIS), it is certain that competition will be intense. Netflix’s stock has been dropping since July, which was the first time the number of subscribers fell. Moreover, Netflix’s stock price has now officially wiped out any gains it’s made over the year so far and both Disney and Apple have a shot at beating Netflix at its own game.

Apple is still facing impending import duties and innovation difficulties

Let’s not forget that the company still faces import duties scheduled for Dec. 15 that could affect nearly all of its major products including iPhones, iPads, MacBooks and Apple Watches. And more importantly, it is thought by many as facing an innovation problem so it heavily relies on customer loyalty that will continue driving its sales. We’ll just have to wait for November 1st launch of Apple TV+ to see the impact of Apple’s new streaming subscription service.

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