Toyota Motor Corp. reported a five per cent jump in quarterly profit Tuesday, outpacing expectations as vehicle sales grew in North America and Europe, offsetting a drop in Japan.

The Japanese maker of the Prius hybrid, Camry sedan and Lexus luxury model said April-June profit totalled a record 587.77 billion yen ($6.2 billion Cdn). Quarterly sales rose two per cent to 6.39 trillion yen ($70 billion).

Both were better than projections by analysts surveyed by FactSet, who had expected a  one per cent increase in quarterly sales and a 12 per cent drop in profit compared with a year earlier.

Toyota managing officer Takuo Sasaki credited cost reduction efforts and a weak yen, which helps Japanese exporters such as Toyota, for the positive results.

But Toyota lowered its vehicle sales forecast for 2014, saying it now expects to sell 110,000 fewer vehicles worldwide than the plan announced in January. Even so, it will still reach the 10 million vehicle industry milestone with sales of 10.22 million vehicles, up two per cent from 2013.

Top-selling automaker

For the first half of the year, Toyota remained the world's top-selling automaker, although Volkswagen AG of Germany beat U.S. manufacturer General Motors Co. to become No. 2 in global vehicle sales.

Toyota's results outshone General Motors, which last month reported a $190 million US profit for the April-June quarter after incurring $1.5 billion US in recall expenses. The U.S. automaker is grappling with the cost of repairing nearly 30 million cars and setting aside compensation for crash victims.

For the latest quarter, Toyota's vehicle sales dipped in Japan, where sales got artificially inflated ahead of an April 1 tax hike as buyers sought to avoid the higher tax.

Vehicles sales also dropped in the rest of Asia, but it gained in North America, Europe, the Middle East, South America and Africa.

Demand was strong in the key U.S. market for the RAV4 sport-utility vehicle and the Corolla subcompact. The Corolla was also a hit in Europe, according to Toyota.

Stake in Tesla

Despite the relatively pessimistic projections, Scott Kuensell, portfolio manager at U.S. investment company Brandywine Global, was excited about Toyota, calling its stock "ridiculously cheap."

Kuensell said Toyota has plenty of cash and boasts a green reputation with a stake in electric carmaker Tesla Motors.

Toyota shares finished flat on the Tokyo Stock Exchange at 6,042 yen ($64 Cdn), shortly before earnings were announced.

Toyota stuck to its financial forecasts for the fiscal year through March 2015 at a profit of 1.78 trillion yen ($20 billion), down two per cent year-on-year, on 25.7 trillion yen ($270 billion) sales, unchanged from the previous year.

The weak yen was a perk for other Japanese automakers as well, including Honda Motor Co. and Nissan Motor Co., which have both reported solid results.