A Good Quarter and a Strong Forecast for Toyota

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Are Toyota's (NYSE: TM  ) troubles fading in the rearview mirror? It's starting to look that way: The Japanese auto giant reported a quarterly profit of 121 billion yen, or about $1.5 billion -- a solid result after several difficult quarters.

But it was the company's forecast for next year that really got Wall Street's attention.

A solid quarter to cap a challenging year
It's no secret that 2011 was a rough year for Toyota. For the year ended March 31 -- Toyota's fiscal year runs from April 1 through the following March -- the company earned just 283.5 billion yen, or about $3.5 billion.

That was enough to beat estimates, but it's far below the annual profits reported by rivals such as Ford (NYSE: F  ) and General Motors (NYSE: GM  ) . Toyota has one heck of an excuse, though: The earthquake and tsunami that devastated northern Japan in March of last year played havoc with Toyota's supply lines, leading to plant shutdowns and global shortages of key models that lasted for months.

Add in flooding in Thailand late last year, which caused additional supply problems, and ongoing struggles with a strong yen, which diminishes the value of profits made in key markets like the U.S., and clearly Toyota was battling uphill. That the company was able to recover so quickly is a tribute to what CEO Akio Toyoda calls the "Toyota Global Vision," a key provision of which is that the company should be structured to remain profitable even in the most challenging of business environments.

Toyoda credited "dealers, suppliers, and employees" with the company's continuing recovery in a speech today, promising "significant changes" to some products and a series of new-model launches in markets around the world this year. He also announced that the company would propose a 30 yen-per-share year-end dividend at its annual meeting, good news for shareholders who have hung in during a long rough stretch for the company.

And there may be more good news to come: Toyota's forecast for the coming year is a strong one.

A promising outlook as Toyota recovers lost ground
Toyota executives are forecasting that the company's profits for the coming year will hit a five-year high of 760 billion yen, or about $9.5 billion, as the company rolls out several key new models and works to regain market share around the world.

That would be a strong result -- better than the record $7.6 billion profit GM booked in 2011, even better than the $8.8 billion operating profit Ford posted last year. But Toyota is off to a solid start: Sales have been up in the U.S. on the strength of new models, as the recently revised Camry and all-new Prius c have both been white-hot sellers.

And while Toyota has been something of an also-ran in China, with sales trailing well behind global peers GM and Volkswagen (OTC: VLKAY), it's gathering strength there as well: Sales were up 14.3% in the first four months of 2012, and the company says it's on track toward its goal of selling a million vehicles in China this year, up from about 883,000 in 2011.

After last year's troubles, significant year-over-year growth in coming months won't be hard for Toyota to find. The challenge will be new growth beyond that: VW has laid down a goal of being the world's largest automaker by 2018, and a resurgent GM -- which took the crown back from Toyota last year -- is gathering momentum as its own product renaissance continues.

But even a recovery to near-top-dog status is likely to be good news for shareholders in coming months, and that shouldn't be hard for Toyota to find as gas prices continue to rise around the world. Energy companies are also poised to benefit, and the Fool's analysts have been tracking the sector closely. To learn more about an energy stock that appears poised to win big, grab your copy of this special free report from The Motley Fool.

Fool contributor John Rosevear owns shares of Ford and General Motors. Follow him on Twitter at @jrosevear. The Motley Fool owns shares of Ford. Motley Fool newsletter services have recommended buying shares of Ford and General Motors and have recommended creating a synthetic long position in Ford. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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