TOKYO  - Toyota Motor Corp more than doubled its full-year operating profit forecast on Friday, as vehicle sales rebound in China from a coronavirus pandemic squeeze earlier this year that contributed to a 24% slide in second-quarter earnings.

Japan’s top automaker said it now expects an operating profit of 1.3 trillion yen ($12.6 billion) for the year through March, 2021, up from the 500 billion it predicted previously. Operating profit for the previous financial year was 2.47 trillion yen.

That topped the 1.25 trillion yen average estimate for full-year profit from 26 analysts polled by Refinitiv.

For the second quarter, from July to September, operating profit fell to 506 billion yen from 662.4 billion in the same period a year earlier, according to Reuters’ calculations, as sales dipped amid the coronavirus impact globally.

Still, the numbers already showed progress compared with April-June, Chief Financial Officer Kenta Kon said.

“If you compare the second quarter to the first you can see a dramatic recovery,” Kon said, speaking during an online press briefing.

Reaction from investors was muted, with shares up just 0.5% near the close of trading in Tokyo, while the Nikkei benchmark index rose 0.9%.

“Investors are looking at how Toyota is faring overseas and given the yen’s appreciation (versus the dollar) and a resurgence of the coronavirus, we have to consider the (profit forecast) revision cautiously,” said Kazuo Kamiya, a fund manager at Nomura Securities. A strong yen reduces the value of sales booked in the United States.

The maker of the RAV4 sports utility vehicle (SUV) crossover and the Prius gasoline hybrid now expects to sell 9.42 million cars this year - up 3.5% from a previous forecasts of 9.1 million this year, but still well below last year’s sales of 10.46 million.

Although still weaker than last year, demand has bounced back, particularly in China, the world’s biggest auto market. Toyota and rivals are pinning recovery hopes on winning business there as China recovers from the pandemic faster than other countries.

Overall vehicle sales in China in September increased 12.8%, a sixth straight monthly gain, although sales were still 6.9% lower than the same time a year earlier.

Toyota has seen demand in China increase for its electric cars and Lexus luxury brand.

A senior Toyota executive in China said in September that annual global sales of electrified vehicles could reach 5.5 million in 2025, five years earlier than initially planned.

($1 = 103.5700 yen)

Reporting by Tim Kelly; Additional reporting by Daisuke Iga; Editing by Kenneth Maxwell

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