Toyota Motor FY Q1 Profit Drop Spooks Market

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Toyota Motor Corp. today reported a quarterly profit of ¥736.8 billion ($5.5 billion) for Q1 of Fiscal Year 2023, down from ¥897.8 billion ($6.74B) the previous year, even though sales rose 7% to ¥8.49 trillion ($63 billion).

A favorable foreign exchange rate from a weak Yen increased Toyota’s operating income for the quarter by ¥195 billion ($1.5 billion), TMC said in a results presentation.

Aside from the well-known semiconductor problems, Covid lock-downs in Shanghai and other parts of Asia, as well as flooding in South Africa and the ongoing Hino emissions fraud matter hurt the results. Toyota shares fell -3.45% after it released its earnings report, which showed a 42% year-over-year drop in operating profit, but recovered slightly to close down -2.99%. The Nikkei average share closed up 0.69% at ¥27,932.20 and even topped the ¥28,000 mark at one point.

Nonetheless, TMC sold ~2 million vehicles during the quarter compared to 2.1 million vehicles in the same period last year. TMC also reaffirmed its to produce 9.7 million vehicles, saying output will increase later this year. It projects sales 10.7 million vehicles worldwide in the fiscal year through March 2023, up from nearly 10.4 million vehicles in the previous fiscal year.

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Toyota posted record earnings in the last fiscal year through  the end of March at ¥2.85 trillion ($21 billion) profit, +27% year-on-year. During the fiscal year ending 31 March 2023, TMC forecast a profit of ¥2.36 trillion ($17.6 billion). This is an increase from an earlier estimate of ¥2.26 trillion ($16.9 billion).

“In order to strengthen competitiveness of the entire supply chain in the medium to long term, we will absorb the burden on our suppliers caused by the current severe business environment,” TMC said. “In terms of the burden on our suppliers caused by the soaring materials prices, in addition to taking actions based on the pre-agreed rules concerning purchase prices, we will handle some of the problems that our suppliers face. We will continue with our investment for growth to create a future mobility society and work together with our stakeholders to improve our profit structure.”