Toyota raised its full-year profit forecast on Wednesday, with the Japanese carmaker betting that cost-cutting and strong demand for hybrids would help it ride out the impact of US President Donald Trump’s tariffs.
The world’s top-selling carmaker now expects operating profit of ¥3.4-trillion (R395.29bn) for the financial year to end-March, up 6% from the ¥3.2-trillion (R364.26bn) it previously forecast.
The US tariffs have dealt a body blow to an industry already stung by deepening competition from Chinese electric vehicle (EV) makers and a once-in-a-century upheaval brought by the advance of EVs and other new technologies. Toyota estimated the tariffs would cost it ¥1.45-trillion (R165.04bn) in the current financial year.
“North America is facing a tough situation due to the impact of tariffs,” Kenta Kon, Toyota’s CFO, told a financial results briefing. While conditions “were not easy” in other markets such as China, Europe, Asia and Africa, profitability and sales volume remained “solid”, he said.
Toyota reported a second straight quarterly operating profit drop in the second quarter at ¥839.6bn (R95.56bn), down 27% from ¥1.16-trillion (R132.01bn) a year earlier and below the ¥863.1bn (R98.24bn) average estimate of eight analysts surveyed by LSEG.
Despite increased vehicle sales, the carmaker’s North American business swung to an operating loss of ¥134bn (R15.24bn) for the first half of the financial year from a ¥128bn (R14.56bn) profit a year earlier, hurt by US tariffs.
Toyota said last week its worldwide production increased by more than 10% in September and rose for a fourth straight month, as both sales and output increased in the US, its top market.
Toyota shares were deep in negative territory on Wednesday afternoon, trading 3.5% lower compared with a decline of 1.8% shortly before the release of its results.
Reuters
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