The world’s top-selling carmaker now expects operating profit of 3.4 trillion yen (S$28.9 billion) for the financial year to end-March
[TOKYO] Toyota raised its full-year profit forecast on Wednesday (Nov 5), as the Japanese carmaker bet solid performance outside the United States would help it ride out the impact of US President Donald Trump’s import tariffs.
The world’s top-selling carmaker now expects operating profit of 3.4 trillion yen (S$28.9 billion) for the financial year to end-March, up 6 per cent from the 3.2 trillion yen it previously forecast.
US tariffs have dealt a body blow to an industry already smarting from fierce competition from China’s EV makers and a once-in-a-century upheaval brought by the advance of new driving technology. Toyota estimated the tariffs would cost it 1.45 trillion yen in the current financial year.
“North America is facing a very tough situation due to the impact of tariffs,” chief financial officer Kenta Kon told a results briefing. While conditions “were not easy” in other markets such as China, Europe, Asia and Africa, both profitability and sales volume remained “solid”, he said.
For the quarter, operating profit tumbled 27 per cent to 839.6 billion yen, falling short of the 863.1 billion yen average in a survey of eight analysts by LSEG. That marked its second straight decline in quarterly profits.
In a sign of the strain from tariffs, Toyota’s North American business swung to a loss of 134 billion yen for the first half of the year, even as demand for its vehicles in the region remained strong, leading to tight inventories.
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Kon’s deputy Takanori Azuma told the briefing that markets such as India were increasingly becoming important to profits and helping offset the battering in the United States.
A decade ago, Toyota’s profit structure was heavily dependent on North America, with nearly half of profits coming from there, Azuma said.
“If tariffs had become an issue under those circumstances, the impact would have been much greater,” he said.
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Toyota said last week its worldwide production increased by more than 10 per cent in September and rose for a fourth straight month, as both sales and output increased in the US, its top market.
Toyota shares stayed deep in negative territory on Wednesday, closing down 3.65 per cent, versus a loss of 2.5 per cent in the Nikkei index. REUTERS
