Toyota boosts profit outlook as earnings surge, fuelled by weak yen: Report

Japan's leading automaker, Toyota has revised its full fiscal year profit forecast upwards following robust earnings in the October to December quarter, where profits nearly doubled compared to the previous year.

According to media reports, the third-quarter profit soared to 1.36 trillion yen ($9 billion), marking a substantial recovery from the setbacks faced during the computer chip production disruptions triggered by the COVID-19 pandemic.

The company's solid performance over the first nine months of the fiscal year resulted in 3.9 trillion yen ($26 billion) profit, more than double the figure achieved in the preceding fiscal year.

A key factor contributing to Toyota's success is the favourable exchange rate, with a weak yen boosting the value of overseas earnings when converted into yen.

The recent exchange rate of about 148 yen to the dollar, compared to 140 yen a year ago, played a pivotal role in enhancing the company's financial performance.

Quarterly sales also experienced an uptick, rising by 23 per cent to 12.04 trillion yen ($81 billion) from 9.75 trillion yen.

Toyota, headquartered in Toyota City, central Japan, responded to its performance by revising its full fiscal year profit forecast to 4.5 trillion yen ($30 billion), surpassing its earlier projection of 3.95 trillion yen ($27 billion).

Similarly, the sales projection for the fiscal year was adjusted to 43.5 trillion yen ($294 billion), up from the initial estimate of 43 trillion yen ($290 billion).

The company attributes these positive adjustments to cost-cutting measures, strategic marketing efforts, and the favourable effects of currency exchange rates.

However, amid the overall positive outlook, Toyota did not raise its vehicle sales forecast for the fiscal year.

Instead, it slightly reduced the forecast to 9.45 million vehicles, compared to the previous expectation of 9.6 million vehicles.

Despite this adjustment, the forecast still exceeds the previous fiscal year's sales of 8.8 million vehicles, showcasing Toyota's resilience in navigating challenges, particularly the global shortage of computer chips that has affected the entire automotive industry.

The impact of the chip shortage is notably felt within Toyota's group, with Daihatsu Motor Co., responsible for manufacturing small models, temporarily suspending production under Japanese government orders.

The automaker admitted to falsifying safety tests for decades, leading to a scandal that surfaced in April 2023.

While the impact on Toyota's overall sales and profits is expected to be limited due to Daihatsu's relatively small contribution, the company acknowledges a potential decline in Japanese sales due to the subsidiary's issues, posing a challenge to Toyota's brand image.

Despite the challenges posed by the Daihatsu scandal and similar irregularities in other group companies, including Hino and Toyota Industries, Toyota remains optimistic about its overall financial outlook.