(Bloomberg) -- Toyota Motor Corp. raised its full-year earnings forecast after quarterly profit topped analysts’ estimates, helped by tight cost controls and resilient demand in Europe.

Operating profit will be 2.5 trillion yen ($22.7 billion) in the full fiscal year through March, Toyota said in a statement Thursday. Analysts were already predicting a similar number. Toyota previously projected 2.4 trillion yen.

Chief Executive Officer Akio Toyoda’s focus on cost controls is helping the car giant buck a trend in recent auto earnings. U.S. rivals General Motors Co. and Ford Motor Co. both lost money in the last quarter of 2019, with GM expecting earnings to be flat this calendar year while Ford forecast a larger-than-expected drop in profits.

“We have been strengthening our competitiveness,” Masayoshi Shirayanagi, Toyota’s operating officer in charge of purchasing, told reporters in Tokyo. “We are starting to see some of the results of those efforts.”

Shares of Toyota rose 2.6% in Tokyo, the biggest jump since July. The stock is just shy of its four-year high.

Europe Demand

Despite softening demand in Japan, North America and China, Toyota benefited from steady growth in Europe, where hybrids accounted for 52% of its sales last year.

“Hybrid vehicles are chosen by more than half of our customers and this has boosted our overall sales in Europe,” Didier Leroy, a Toyota executive vice president, said at the media conference.

Toyota also benefited from currency fluctuations, saying a stronger yen didn’t hurt the company as much as it had predicted.

Operating income in the fiscal third quarter, which ended in December, was 654 billion yen, topping the average analyst forecast of 643.8 billion yen. Revenue came to 7.54 trillion yen, compared with the consensus estimate for 7.42 trillion yen.

American Boost

In North America, operating profit rose to 105.9 billion yen, nearly four times the 26.4 billion in the year-earlier period. That came despite a 2% slide in sales volume to 668,000.

Company officials attributed that profit surge to a number of factors, including a shift in production toward more light trucks such as sport utility vehicles and pickups. Demand for Toyota’s crossovers and SUVs such as its best-selling RAV4 have helped offset falling demand for sedans.

“The U.S. Highlander is fresh while RAV4 is very strong,” said Tatsuo Yoshida, senior auto analyst at Bloomberg Intelligence. “Full-year guidance was revised up, but fourth-quarter assumptions are conservative and it is likely Toyota eventually beats its guidance.”

Strong sales of hybrid gas-electric vehicles have boosted European volumes, lifting Toyota brand sales in Europe above 1 million vehicles for the first time since 2008. But a sales tax hike in Japan has weighed on home market demand.

Virus Impact

Japan’s largest automaker expects its global sales volume for the fiscal year to hit 8.95 million vehicles, unchanged from an earlier projection. Toyota’s group companies sold 10.7 million vehicles last calendar year, second only to Volkswagen AG’s 10.9 million. GM sold 8.4 million vehicles last year and Ford shipped about 5.4 million.

One wild card is the impact from the production shutdown in China, the world’s largest car market, due to the spread of a deadly virus. Toyota said late last month it would extend a planned work stoppage at its Chinese factories until at least Feb. 9.

The company’s profit forecast doesn’t take the shutdown into account, Shirayanagi said. Toyota is still assessing the shutdown’s impact and is looking into how its supply chain is affected.

“The impact of this new additional problem is really unclear at this stage,” Toyota’s Leroy said.

(Updates with North America profit in 10th paragraph.)

To contact the reporter on this story: Chester Dawson in Southfield at cdawson54@bloomberg.net

To contact the editors responsible for this story: Young-Sam Cho at ycho2@bloomberg.net, Ville Heiskanen, Reed Stevenson

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