Tokyo (AFP) – Japanese car giant Toyota raised its full-year profit forecasts on Thursday on the back of strong demand for hybrid vehicles and the weak yen, despite fierce competition from Chinese rivals. For the current year to March 31, 2027, the firm said it expected net profit of 3.57 trillion yen ($22.6 billion), up from its previous projection in August of 3.25 trillion yen. However, the forecast still foresees a year-on-year decline in profit of 7.2 percent.
Sales remained “resilient,” driven by hybrid vehicles, particularly in the United States, the company said, as well as the weakening of the yen which this summer fell to its lowest level in four decades. Although the forecast came in below the expectations of analysts surveyed by Bloomberg, Toyota’s share price soared by more than 15 percent in the wake of the announcement. The company also predicted operating profit of 3.9 trillion yen, compared with its earlier forecast of 3.4 trillion yen.
The world’s largest automaker by sales said the decision came after it “mitigated the impact of rising materials prices and production disruptions caused by earthquakes and floods through recovery efforts at production sites and optimised global supply, thereby maintaining consolidated vehicle sales.” The hike in forecasts overshadowed a lacklustre second quarter, which saw Toyota’s net profit slump 18.5 percent year-on-year to 759.4 billion yen, well short of expectations, still weighed down by more expensive materials and other factors.
Its quarterly revenue, by contrast, jumped 8.6 percent year-on-year to 13.4 trillion yen, thanks to an increase in unit sales in Japan and Europe and stabilisation in North America, despite tariffs imposed by Washington. For the full 2026–2027 fiscal year, which will end in late March, Toyota expects revenue to grow 5.6 percent year-on-year to 53.5 trillion yen, a figure it slightly revised downward on Thursday.
– China sales plunge –
The automaker acknowledged a “challenging competitive environment.” This is especially true in China, where Toyota again saw its unit sales plunge 25 percent year-on-year in the second quarter. “In China, our market share has stopped declining and is currently holding firm” because Toyota has been “rolling out products suited” to local demands, chief financial officer Yoichi Miyazaki told reporters.
“To further expand our customer base in the new energy vehicle segment, we will make full use of the strengths of our joint venture partners and, under the leadership of the local chief engineers, swiftly reflect market feedback in our planning, development and improvement processes,” he said. The yen has weakened because of the gap between Japanese and US interest rates, high oil prices and concerns that Prime Minister Sanae Takaichi’s spending plans will further swell Japan’s enormous debts.
The weak currency has in recent months inflated resource-poor Japan’s import costs, especially for oil as the Iran war strangles supplies from the Middle East. While a weaker currency also boosts Japanese exporters’ profitability, the country’s automakers are being squeezed by US tariffs, the Middle East war and fierce competition from Chinese rivals. In July, Chinese electric vehicle giant BYD challenged Toyota, Nissan and Suzuki on their home turf, launching a pint-sized “kei” car in Japan.
© 2024 AFP
