Toyota's quarterly profit nearly doubles on weak yen and strong global demand

Tokyo: Toyota Motor Corp. reported a near doubling of first-quarter profit on Tuesday, boosted by strong vehicle demand in key markets and the benefits of a weaker Japanese yen. The maker of the Prius hybrid and Lexus luxury vehicles posted a net profit of 1.48 trillion yen ($9.4 billion) for the April-June quarter, compared with 841 billion yen in the same period a year earlier. Quarterly sales rose 10% year-on-year to 13.5 trillion yen ($85 billion). A weaker yen significantly supported earnings, increasing the value of overseas revenue when converted into Japan's currency. During the latest quarter, the US dollar traded at about 160 yen, compared with around 145 yen during the same period last year. Toyota said favourable exchange rates contributed approximately 345 billion yen ($2.2 billion) to operating profit during the quarter. The company is using an exchange rate assumption of 160 yen to the dollar for the current fiscal year. Strong demand for hybrids Toyota's Chief Officer Takanori Azuma said demand remains robust for the company's hybrid vehicles across major markets, particularly in the United States. The Camry sedan and RAV4 sport utility vehicle continued to perform strongly in the US market, while the Urban Cruiser and Innova Hycross were among the top-selling models in India. The Yaris also remained a strong performer in Thailand and Europe. Toyota said it plans to expand hybrid vehicle and battery production through 2030 while continuing efforts to reduce manufacturing costs. Azuma added that the company's electric vehicle sales are also performing well. Vehicle sales outlook improves Although Toyota sold 2.39 million vehicles globally during the quarter, slightly lower than the 2.41 million vehicles sold a year earlier, the automaker expects stronger performance over the full financial year. The company forecasts global sales of 9.7 million vehicles for the fiscal year ending March 2027, up from 9.595 million vehicles in the previous financial year. Challenges remain Toyota acknowledged ongoing risks linked to geopolitical tensions in the Middle East. The effective closure of the Strait of Hormuz, a critical shipping route, has created challenges for Japanese automakers that rely heavily on maritime transport. The company said it is exploring alternative logistics routes to mitigate potential disruptions. Toyota is also dealing with the impact of the 7.1-magnitude earthquake that struck Kumamoto in southwestern Japan on 28 July. The automaker has suspended production at its Tahara plant for five days through Friday. Operations will then enter a scheduled summer shutdown, resulting in reduced production through the end of the month. Full-year forecast Despite the strong start to the year, Toyota expects full-year profit to decline compared with last year. The company forecasts net profit of 3.25 trillion yen ($20.6 billion) for the fiscal year ending March 2027, down from 3.85 trillion yen ($24 billion) recorded in the previous year. However, annual sales are projected to increase to 54 trillion yen ($342 billion), compared with 50.7 trillion yen in the last fiscal year. Toyota shares fell nearly 2% in Tokyo trading following the earnings announcement.