May 11 (Bloomberg) -- Toyota Motor Corp.'s fourth-quarter net income more than doubled, propelling annual profit to a record 1.16 trillion yen ($10.2 billion), twice the combined earnings of General Motors Corp. and Ford Motor Co. The company targets similar results this year.

The world's biggest automaker by market value said profit for the three months ended March 31 rose to 351.2 billion yen, from 145.8 billion yen in the year-earlier quarter, on rising demand for its most profitable models including the Lexus luxury car. Fourth-quarter sales rose 22 percent to 4.68 trillion yen.

Executive Vice President Ryuji Araki said profit this year will be driven by cost cuts and further gains in its U.S. market share, which was 11.7 percent in April. The Toyota City, Japan- based company was rated as the maker of the most reliable cars by J.D. Power & Associates for a seventh year and started selling a full-sized version of its Tundra pickup truck in the U.S.

``Everyone expects Toyota to raise profit by more than 10 percent this year,'' said Ichiro Takamatsu, who helps manage the equivalent of $564 million in Japanese equities at Cigna International Investment Advisors K.K. in Tokyo. ``There's not a single black spot at Toyota.''

Toyota shares rose as much as 4.2 percent to 28.8 euros at 12:43 p.m. in Frankfurt. The Tokyo-traded stock, which gained 36 percent this year, was unchanged at 3,760 yen before the earnings were released.

Beating Expectations

Toyota earned 1.16 trillion yen, or 342.86 yen per share, in the full year compared to 751 billion yen, 211.32 yen per share, a year earlier. General Motors, the world's largest automaker, and Ford, No. 2 in the U.S., had combined profits of $4.3 billion last year.

Toyota sold 6.72 million vehicles last year, less than halve the 15.3 million vehicles sold by its two U.S. rivals. Toyota will sell 300,000 more vehicles this year, 4.5 percent more than last year, Araki said.

Profit beat the median estimate of seven analysts in a survey by Bloomberg news of 1.06 trillion yen profit. The 55 percent gain in net income was the six straight gain. Record earnings in the past four years cap 50 years without a loss.

``We were able to increase profit in every region,'' Araki told a press conference in Tokyo. He said the company targets ``similar earnings'' this year by cutting costs and expanding abroad to counter the stronger yen, which gained 7.3 percent against the dollar last fiscal year.

Stronger Yen

The automaker based last year's earnings forecasts on exchange rates of 113 yen per dollar and 133 yen per euro. Toyota expects the Japanese currency to strengthen to 105 yen per dollar and 125 yen per euro this fiscal year. The yen traded at 113.58 per dollar and 134.46 per euro as of 6:56 p.m. in Tokyo.

Toyota's annual operating profit drops about 20 billion yen for every 1 yen its home currency gains against the dollar, according to an estimate by Credit Suisse First Boston Japan Inc.

Toyota became the first Japanese company to top 1 trillion yen in annual income. Its market value of $119 billion exceeds that of DaimlerChrysler AG, General Motors and Ford combined. It has the automotive industry's highest credit rating, with $13.3 billion in cash.

U.S. Sales

Toyota said sales outside Japan may rise 6.2 percent this year to 4.69 million units. Sales in North America, the world's biggest automotive market, may increase 3.7 percent to 2.18 million units for the period.

Toyota said incentives in the U.S. rose by $400 per vehicle to $900 this year. That compares to the U.S. automakers' increase of $1,000 to $3,400 to $4,000 per vehicle, the company said.

Competition may be tougher this year. In 2004, General Motors plans to release at least 29 new and revamped models in the U.S. including the Pontiac G6 sedan, while Ford plans at least six, including the new Five Hundred sedan, which will compete with Toyota's Camry.

Toyota said annual sales rose 12 percent to a record 17.29 trillion yen. Annual operating profit, or sales minus the cost of goods sold and administrative expenses, increased 31 percent to 1.67 trillion yen. Current profit, or pretax profit from operations, rose 44 percent to 1.77 trillion yen.

Investments

Toyota said its capital expenditure this year will rise 3.4 percent to 990 billion yen while research and development costs will be stable at 680 billion yen. The automaker, which has been increasing shareholder dividends, will pay 45 yen a share in the year ended in March, up 9 yen from the previous year.

Operating profit for the year just ended got a 107 billion yen boost as the company returned part of its pension obligations to government management. The tally was also aided by a 320 billion yen increase from sales of pricier, more profitable models, while cost cuts added 230 billion yen. Its financial operations added 146 billion yen to operating profit.

Exchange rate losses cut the profit by about 140 billion yen, and another 122 billion yen was trimmed by labor costs.

Sales in Japan, the world's second-biggest automotive market, may rise 1.2 percent this year to 2.33 million units, Toyota said. The maker of the Corolla, which was Japan's best- selling vehicle in April for the third month this year, said its market share in the country may rise to 43 percent this year, from 42.9 percent last year.

Vehicle sales in Asia surged 23 percent to 557,000 units. Toyota plans make 700 vehicles in China everyday by July, double its previous output, to meet strong demand for Corolla and Vios cars, Araki said.

``I have no concerns about Toyota's performance in the coming year,'' said Atsushi Osa, manager of Sumitomo Mitsui Asset Management Co.'s $47 billion of funds, before today's earnings.

To contact the reporter on this story: Kae Inoue in Tokyo at kinoue@bloomberg.net.

Last Updated: May 11, 2004 07:28 EDT