In fiscal 2008, ended March 31, 2008, Toyota posted significant business results. On a consolidated basis, we recorded a year-on-year increase in vehicle sales of 389,000 units, to 8,913,000 units; a 9.8% increase in net revenues, to ¥26,289.2 billion; a 1.4% increase in operating income, to ¥2,270.3 billion; and a 4.5% increase in net income, to ¥1,717.8 billion. Factors contributing to the increase in operating income totaling ¥410.0 billion were the effects of marketing efforts of ¥290.0 billion and cost reduction efforts of ¥120.0 billion. On the other hand, factors resulting in the decrease in operating income totaling ¥378.3 billion were increases in expenses of ¥330.2 billion and an increase in valuation losses on interest rate swaps stated at fair value by ¥48.1 billion. Moreover, net income increased ¥73.8 billion compared with the last fiscal year, mainly due to a ¥60.6 billion increase in equity in earnings of affiliated companies.
In fiscal 2008, Toyota's profit structure became more geographically balanced, due to growing contributions from resource-rich and emerging countries in Asia, Central and South America, Oceania, and Africa. I believe this can be attributed to Toyota's growth strategy of utilizing every opportunity across its full product lineup and in all regions.
Furthermore, the steady growth of net income?the ultimate profit of Toyota's business?is also a significant point for fiscal 2008, and is the result of rising operating income from our global operations and equity in earnings of affiliated companies. Growth of equity in earnings has been particularly strong and has more than doubled over the past four years, primarily due to the rapid growth of Chinese operations.
Moving forward, Toyota will continue to build a rock-solid base through improvements in technology, supply, and marketing and their supporting factors, such as product quality, cost, and human resources. Though these efforts and by taking advantage of opportunities, while avoiding or absorbing risks, in all product segments and regions, Toyota will continue to pursue stable, long-term growth.
Mitsuo Kinoshita, Executive Vice President
Fiscal years ended March 31
In Japan, net revenues increased 3.4%, to ¥15,315.8 billion, while operating income decreased 1.2%, to ¥1,440.3 billion, which maintained earnings at the same high level recorded in the previous fiscal year. As a result of brisk demand in resource-rich and emerging countries in fiscal 2008, we increased export volumes through our flexible domestic production system.
In North America, net revenues increased 4.4%, to ¥9,423.2 billion, while operating income decreased 32.1%, to ¥305.3 billion. Amidst lower sales in the U.S. automotive market year on year, Toyota's market share in the United States reached a record high of 16.3%. At the same time, the rapid decline in interest rates in the United States during fiscal 2008 resulted in an increase in valuation losses on interest rate swaps stated at fair market value by ¥66.7 billion, to ¥91.4 billion, at sales finance subsidiaries. Excluding the influence of these valuation losses on interest rate swaps, Toyota's operating income in North America remained high, at approximately ¥400.0 billion.
In Europe, Toyota recorded a rise in net revenues of 12.7%, to ¥3,993.4 billion, and a 3.0% increase in operating income, to ¥141.5 billion. In the rapidly growing Russian and Eastern European markets, sales of Camry and Avensis were brisk and contributed to profit growth.
In Asia, net revenues rose 40.2%, to ¥3,120.9 billion, and operating income increased 2.2 times over the previous fiscal year, to ¥256.4 billion. Strong sales of IMV*2 vehicles and Yaris in Indonesia and Thailand, as well as increased export of IMV vehicles to areas outside of Asia?enabled by the enhanced production capacity in Thailand?all contributed to the expansion of profit.
Central and South America, Oceania, and Africa also posted a large increase in earnings, with increases of 19.3% in net revenues, to ¥2,294.1 billion, and 72.4% in operating income, to ¥143.9 billion. Models adapted to local tastes, such as the Corolla in Brazil, IMVs in Argentina, and the Camry in Australia, helped boost vehicle sales across all markets.
In the financial services segment, net revenues rose 15.2%, to ¥1,498.3 billion, while operating income fell 45.4%, to ¥86.5 billion, mainly due to an increase in valuation losses on interest rate swaps stated at fair value by ¥48.1 billion, to ¥68.0 billion, at sales finance subsidiaries. In addition, the credit crunch in the U.S. market that caused the loan loss ratio to soar in the latter half of 2007 is another principal cause of the decline in the financial services segment income. Toyota has maintained a conservative credit policy. Furthermore, we have strengthened our credit control and debt collection practices since last autumn. In addition, the increase in outstanding loan balance due to the increase in vehicle sales and the improvement in lending margins are contributing to financial services segment earnings.
Equity in earnings of affiliated companies rose 28.9%, to ¥270.1 billion, primarily due to the strong performance by our joint ventures in China and domestic Group companies. Especially, ongoing efforts by our Chinese joint ventures to steadily develop their production and sales foundation, in response to brisk local demand, are contributing greatly to profit.
Responsibilities include accounting-related operational areas
IMV:An abbreviation for Innovative International Multipurpose Vehicle, which refers to sport-utility vehicles (SUVs), pickup trucks, and other multipurpose vehicles that Toyota develops and produces overseas for markets worldwide.