Toyota aims for consistent return on equity, finance executive says

Audio By Carbonatix

Enlarge

TOKYO (Reuters) – Toyota Motor is increasingly focusing on return on equity as a performance measure, talking internally about raising ROE to 20% as one guideline, a senior finance executive at the Japanese automaker said during an interview on Monday.

While cautioning that ROE is not a perfect measure, the executive emphasised consistency over time-bound targets, adding that Toyota was not looking to formally commit to achieving a specific level by a certain date.

“What’s important isn’t just reaching a certain percentage by a specific time, but maintaining it consistently,” said Masahiro Yamamoto, chief officer of Toyota’s Accounting Group.

ROE is a ratio that measures a company’s profitability relative to its shareholders’ equity. Toyota’s ROE reached 15.6% for April-December 2024, in line with the 15.8% for the 2023 fiscal year. The metric has increased from 9.0% in fiscal 2022 and 11.5% in the financial year before that.

Toyota has long been working to improve its profit margin by reducing the cost it takes to produce its vehicles, thereby lowering the break-even point for its consolidated sales volume.

The next time the automaker is likely to publish an ROE figure is in the second week of May when it usually reports full-year financial results.

Speaking before the U.S. imposed 25% tariffs on imports from Mexico and Canada on Tuesday, Yamamoto said Toyota – which has assembly plants in both targeted countries – would provide information about the impact of tariffs once it was able to.

Last month, Toyota said a nearly $14 billion factory in North Carolina – its 11th U.S. manufacturing plant – was ready to begin production, with battery shipments for electrified vehicles including hybrids starting in April.

(Reporting by Daniel Leussink and Maki Shiraki; Editing by Christopher Cushing)