By Naomi Tajitsu
TOKYO (Reuters) - Toyota Motor Corp (T:7203) plans a $1.8 billion share buyback, Japan's biggest automaker said on Thursday, after beating quarterly forecasts on higher global vehicle sales and an improved performance in North America.
Operating profit rose 14% to 662.3 billion yen ($6.1 billion) for the three months to September 30 as Toyota enjoyed its strongest second quarter since 2015.
The profit beat an average forecast of 592.3 billion yen, based on estimates from nine analysts, Refinitiv data showed.
It sold 2.75 million vehicles globally, up from 2.18 million a year earlier.
Sales in North America, Toyota's biggest market, rose 5.6%, while sales in Asia climbed 3.4%.
Operating profit in North America, which has been a sore spot for Toyota over the past two years, more than doubled helped by less discounting.
"New models of the RAV4 and the Corolla, as well as last year's Camry, have been well received in North America, so we've been able to lower incentives," Operating Officer Kenta Kon told reporters at a briefing.
For an interactive chart on Toyota's operating profit and vehicle sales, click on https://tmsnrt.rs/312ftUg
Toyota said it would buy back up to $1.8 billion worth of its common stock, or 34 million shares, by end-March.
It maintained its forecast for operating profit in the year to March to fall 2.7%, after three years of gains, as it expects a strengthening yen to weigh.
It lowered its forecast for annual global car sales by 2.7% to 10.7 million units, weighed by weakening demand in India, Indonesia and Thailand. Still, it expects record sales topping last year's 10.6 million.
'EVERY LAST DROP'
Toyota's projected profit slip is subdued versus smaller rivals including Mitsubishi Motors Corp (T:7211) Subaru Corp (T:7270) and Mazda Motors Corp (T:7261), which have slashed their full-year outlooks by up to 67% this month amid weaker demand for their cars.
Many of them acknowledge they are struggling to contain costs amid the need to invest heavily to develop self-driving cars and electric vehicles.
Toyota also said higher R&D investments and rising labor costs had made cost-cutting a challenge, but it managed an additional 45 billion yen in cost savings during the quarter.
Executive Vice President Mitsuru Kawai told reporters that the company was looking at every possible way to cut production costs and improve efficiency at its factories, including scraping out "every last drop" of vehicle body paint from the can before opening a new one.
"(Each drop of paint) on its own would represent only a fraction of a yen in savings, but if we add up these efforts we can build a savings effect," he said.