TOKYO - Toyota Motor Corp. on Tuesday raised its net profit forecast for the current business year through next March to 3.25 trillion yen ($20.6 billion) from 3 trillion yen, reflecting a weaker assumed exchange rate and robust demand for hybrid vehicles.
Despite the upward revision, the world's largest automaker by volume maintained its forecast for a third straight annual decline in net profit, expecting it to fall 15.5 percent from the previous year due in part to the impact of tensions in the Middle East.
Toyota also raised its operating profit forecast for the fiscal year through March 2027 to 3.4 trillion yen from 3 trillion yen announced in May, although that would still represent a 9.7 percent decline from the previous business year. It also revised its sales forecast upward to 54 trillion yen from 51 trillion yen, which would mark a 6.5 percent increase.
The previous outlook was based on assumed exchange rates of 150 yen to the U.S. dollar and 180 yen to the euro, but Toyota has revised them to 160 yen and 181 yen, respectively, a change expected to boost operating profit by 480 billion yen. A weaker yen generally increases the value of overseas earnings when they are repatriated.
The expected full-year impact of the Middle East conflict on operating profit was reduced to a 510 billion yen drag from the initial estimate of 670 billion yen, largely due to newly developed alternative logistics routes, the company said.
Toyota said it is still assessing the impact of the magnitude 7.1 earthquake that struck Kumamoto Prefecture in southwestern Japan last week and has not yet reflected it in its earnings outlook.
Despite uncertainty surrounding business conditions, including the impact of Middle East tensions, the company maintained its global production forecast for Toyota and Lexus vehicles at 10 million units.
"This reflects Toyota's well-balanced production and sales system, with strong performance in the United States and other regions offsetting weakness in certain markets," Takanori Azuma, chief accounting officer, told an online briefing.
Meanwhile, Toyota posted a net profit of 1.48 trillion yen in the three months through June, up 75.6 percent from a year earlier, driven by a weaker yen and higher sales of hybrid vehicles.
The automaker reported an operating profit of 1.06 trillion yen in the April-June period, down 8.8 percent from a year earlier, as the impact of the Iran war reduced profit by 75 billion yen. Sales rose 10.4 percent to a record 13.53 trillion yen.
The Toyota Group's vehicle sales, including those of subsidiary Daihatsu Motor Co., fell 4.1 percent from a year earlier to 2.71 million units in the quarter, partly due to the impact of the Middle East conflict.
The first-quarter figures do not include sales by Hino Motors Ltd., which were included in the same quarter last year, because Hino ceased to be Toyota's consolidated subsidiary following its business integration with Mitsubishi Fuso Truck and Bus Corp. in April.
