Toyota’s (NYSE:TM) ADR-listed shares experienced a significant surge on Wednesday following an upward revision of its revenue and operating income forecast by the world’s largest automaker. Toyota attributes the positive adjustments to improved operations and favorable currency conditions, and the company also unveiled plans for a share buyback program and increased dividends.

Toyota now anticipates that its sales revenue for fiscal year 2024 will reach ¥43 trillion ($284.7 billion), up ¥5 trillion from its previous projection, while operating income is expected to rise to ¥4.5 trillion ($30 billion). In a statement, the company explained, “The forecast has been revised upward from the previous forecast in light of the impact of exchange rate fluctuations as well as efforts to improve profitability.”

These efforts to enhance profitability include cost reduction initiatives, the moderation of material prices, marketing strategies aimed at improving sales mix, and implementing price increases to drive profits.

In line with these developments, Toyota has announced plans to repurchase up to ¥100 billion ($660 million) worth of shares, equivalent to 0.44% of its float, and increase its dividend by ¥30 ($0.20) per share.

However, Toyota has chosen not to revise its global vehicle deliveries forecast, which remains at 11.38 million vehicles. While the company acknowledges a sales decrease due to “uncertainty” in markets such as China, it foresees improvements in regions like North America and other areas with anticipated robust market conditions. Additionally, Toyota expects a recovery in supply in the European market.

Toyota’s notable decision is its adjustment of the global forecast for BEV (battery electric vehicle) sales, which is projected to decrease by nearly 40% to 123,000 vehicles, down from the prior estimate of 202,000. Hybrid sales are expected to compensate for this decline. Although Toyota did not specify the reasons for the BEV sales reduction, it appears to align with the forecasts of Ford and GM, which anticipate a drop in EV demand in the US due to high prices. Toyota recently announced an additional $8 billion investment in an upcoming battery plant in North Carolina, with the expectation of a surge in EV demand by 2025 in the US.

Reviewing Toyota’s most recent quarter (July-September), the company reported sales revenue of ¥11.43 trillion ($76 billion), marking a 24% increase from the previous year, with operating income reaching ¥1.44 trillion ($9.5 billion), nearly tripling the figure from the prior year. Toyota’s margin improved significantly, climbing from 4.7% a year ago to 11.2%, reflecting the positive impact of cost-cutting measures, improved materials pricing, and better pricing and product mix.

Christopher Richter, senior analyst at CLSA Securities, commented on Toyota’s performance and improved outlook, stating, “It’s a very good result, much bigger than we expected. We are in a recovery in the auto market after three years of a pandemic and the chip shortage.”

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