Toyota shares hit record high on earnings, EV and chipmaking plays

Investing.com-- Shares of Toyota Motor Corp (TYO:7203) surged to a record high on Wednesday after the Japanese carmaker clocked strong quarterly earnings, and also announced more investment in electric vehicles and semiconductor manufacturing. 

Toyota’s Japanese shares jumped 4.7% to 3,283.0 yen, after hitting a record high of 3,361.0 yen. Toyota’s U.S.-listed shares (NYSE:TM) surged nearly 8% in overnight trade and were also at a record high of $218.66. 

Gains in Toyota spilled over into other automobile stocks, with smaller peers Nissan (OTC:NSANY) Motor Co., Ltd. (TYO:7201) and Suzuki Motor Corp. (TYO:7269) rising 3.5% and 2.6%, respectively, on Wednesday. The broader Nikkei 225 index was flat.

Toyota's shares saw extended gains after it clocked stronger-than-expected earnings in the December quarter, and also forecast a record-high profit for the fiscal year to March 31, 2024. 

Toyota’s operating profit for the December quarter was 1.68 trillion yen ($11.3 billion)- a 76% jump from last year. The firm forecast a record-high annual profit of 4.9 trillion yen ($33 billion). 

Earnings were boosted chiefly by booming sales of Toyota’s hybrid vehicles, which are high-margin items. A weaker yen also benefited the automaker’s overseas sales. 

In addition to the positive earnings, Toyota said it will make a bigger push into EV and hybrid vehicle production by investing an additional $1.3 billion at a plant in Kentucky. While global EV sales declined over the past year, Toyota’s hybrid sales- a class it had created nearly two decades ago with its Prius model- helped the automaker largely outpace its global peers. 

Additionally, the world’s largest automaker by sales will take a minority stake in a new semiconductor plant being constructed in Japan by Taiwanese chipmaker TSMC (TW:2330) (NYSE:TSM). The move will provide Toyota with more insulation against any potential disruptions in global chip supplies- a trend that had harangued automakers through the COVID-19 pandemic over the last three years. 

The positive moves largely overshadowed an ongoing scandal at Toyota’s Daihatsu unit, over the alleged faking of safety certification tests. Toyota slashed its annual vehicle sales target after suspending all shipments from Daihatsu in late-2023. 

The firm, and its Daihatsu unit are currently under investigation by Japanese authorities.