Our Financial Results
We have announced the financial results for the second quarter of the current fiscal year, which ends on March 31, 2025.
Unfortunately, we were unable to achieve the results we had forecast for the second quarter, which we announced in July. We have also been forced to revise downward our full-year forecast.
In the first half of the fiscal year, automobile sales in Japan were down 3% year-on-year, due to the impact of certification fraud issues at major automakers. In contrast, sales by Japanese automakers in North America were strong, up 4% from the previous year. In China, however, Japanese automakers' sales declined by 27% year-on-year, and they are facing significant challenges.
Nevertheless, in both regions, the market environment remains within the range previously anticipated.
On the other hand, the exchange rate has fluctuated wildly. Changes in the dollar-yen exchange rate have a short-term negative effect on our sales and profits when the yen appreciates, and have a positive effect when the yen depreciates. The yen fell sharply against the dollar, from 152 yen at the beginning of the fiscal year, to 162 yen in early July. Then it appreciated rapidly to 139 yen against the dollar in September. We factored this trend into our exchange rate assumptions for the second half of the year, but its negative impact is in the hundreds of millions of yen, and this is one of the main reasons for the downward revision of our earnings forecast. As of the end of October 2024, the yen had strengthened again to 153 yen per dollar. However, the U.S. presidential election is coming up, and other causes of changes in interest rates and currency policy may also arise. The Bank of Japan is also considering the timing of interest rate hikes, so it is difficult to predict what the exchange rate may be by the end of the fiscal year. Therefore, we are basing our assumption about the exchange rate on the trend as seen in September. We believe it is relatively conservative.
In addition, the Mexican peso has been weakening rapidly against the dollar. The dollar-equivalent of deferred tax assets and other items at our Mexican subsidiary, which uses the US dollar as its functional currency, has decreased significantly, resulting in a decline in net income.
New orders from Toyota Motor North America are expected to begin in earnest about two months later than the previous forecast made in July, and this is another factor contributing to the decrease in our actual sales and profits, as compared to our forecast. However, when we come to comparing the first half of the year with the second half, we expect sales to increase by 1.7 billion yen and profit to increase by 400 million yen. We anticipate that our strategic initiatives to increase sales and market share will yield results, although the timeline may differ from our initial expectations.
This concludes my report. I would like to ask all of you, our shareholders, for your continued understanding and support.