Toyota Braces for 3rd Consecutive Annual Profit Decline

Tokyo, May 8 (Jiji Press)–Toyota Motor Corp. said Friday that its net profit in the current business year is expected to fall for the third consecutive year amid the harsh business environment due to the deteriorating situation in the Middle East. For fiscal 2026, which started in April, the leading Japanese automaker projected a consolidated net profit of 3 trillion yen, down 22 pct from the previous year, and an operating profit of 3 trillion yen, down 20.3 pct. Sales are forecast to increase 0.6 pct to 51 trillion yen. Toyota estimated that higher material costs and other factors caused by the Middle East situation will reduce its profits by 670 billion yen for the current year. In addition, higher U.S. tariffs imposed by the administration of President Donald Trump are expected to continue weighing on its earnings. During an online press briefing, Toyota President Kenta Kon, who took office last month, explained that the automaker has been working to reduce costs and improve productivity. He indicated that the company will continue growth-oriented investments despite the challenging business environment. The Middle East turmoil is expected to raise the prices of crude oil and oil-related products while blocking auto exports to the region. Toyota estimated profit decreases of 400 billion yen resulting from growing costs attributed to higher fuel and material prices and 270 billion yen from lower vehicle sales in the Middle East and other regions. The negative impact of higher U.S. tariffs is estimated at 1.38 trillion yen, the same level as in fiscal 2025, which ended in March. Toyota assumed foreign exchange rates of 150 yen to the dollar and 180 yen to the euro. The assumed euro rate is higher than in the previous year, which could result in a profit increase of 235 billion yen. The Toyota group’s global vehicle sales, including those at Daihatsu Motor Co., are estimated to decrease 0.9 pct to 11.18 million units. This decrease is due to the exclusion of Hino Motors Ltd. from the group’s consolidated accounting. Vehicle sales are forecast to grow in the U.S. and European markets on the back of robust demand for hybrid vehicles but to decline slightly in Japan. Electric vehicle sales are expected to expand significantly in Japan and abroad. In fiscal 2025, Toyota’s sales grew 5.5 pct to a record 50,684.9 billion yen, making it the first Japanese company to exceed the 50-trillion-yen mark, partly thanks to strong sales of its hybrid vehicles in the North American market. Still, Toyota saw its net profit fall 19.2 pct to 3,848 billion yen, down for the second straight year, and its operating profit drop 21.5 pct to 3,766.2 billion yen, weighed down by higher U.S. tariffs. “Our continued efforts resulted in these profits amid major environment changes,” Kon said. END [Copyright The Jiji Press, Ltd.]