Japanese automaker Toyota Motor saw its net profit fall 18.5 percent year on year to 759.4 billion yen in the second quarter of its fiscal year. The results fell significantly short of analysts’ expectations, mainly because of costlier materials and other factors. However, thanks to strong demand for hybrid vehicles and a weak yen, the world’s largest automaker by number of vehicles sold raised its full-year outlook. Toyota announced this in a press release today.
First profit growth in six quarters: Results boosted by weak yen and strong demand in Europe
Revenue for the three months to the end of September rose 8.6 percent to 13.4 trillion JPY. It was supported by higher sales in Japan and Europe and by stabilization in North America. The results were also helped by the weak yen, which fell against the dollar this summer to its lowest level in roughly 40 years. The weak domestic currency is attributed to the gap between interest rates in Japan and in the USA, high oil prices, and concerns that Prime Minister Sanae Takaichi’s spending plans will further increase Japan’s already enormous debt.
Operating profit rose 34 percent to 1.13 trillion JPY. It was the first increase in six quarters. Analysts had expected a profit of 992 billion yen.
The bet on hybrids is paying off: Toyota raises its full-year outlook but faces pressure from China
The company also improved its outlook for the current fiscal year 2027, which ends in March. It now expects a net profit of 3.57 trillion JPY, whereas the August forecast projected a profit of 3.25 trillion JPY. Compared with the previous year, however, this still represents a decline of 7.2 percent. The cause is strong competition from Chinese companies, both in the domestic market and abroad. The outlook also fell short of the estimate of analysts surveyed by Bloomberg.
Unlike other traditional automakers, which went all in on electric vehicles and then had to write off billions of dollars in investments when demand for EVs weakened, Toyota focused primarily on refining gasoline-electric hybrid technology, which it popularized decades ago with the Prius. This strategy has proved important for its ability to maintain market share in its main market, the United States. Elsewhere, it faces a threat from fast-growing Chinese makers of electric vehicles.
Source: ČTK
