Toyota is fighting headwinds in its efforts as it is faced with rising interest rates in the United States, COVID lockdowns in China, and chip shortages at its factories. Eri Sugiura reports for the Financial Times:
Toyota’s quarterly operating profit fell 25 per cent from a year earlier as the world’s largest carmaker warned that it was struggling to cope with yen volatility, interest rate rises in the US and production disruption caused by China’s coronavirus lockdowns.
Following record profits last fiscal year through March, Toyota’s fortunes have reversed as persistent chip shortages and rising materials costs wiped out benefits from the yen’s decline to a 32-year low.
For the July to September quarter, the automaker posted an operating profit of ¥562bn ($3.8bn), down from ¥749bn a year earlier. That was lower than market estimates of ¥784bn, according to S&P Global Market Intelligence, causing shares to fall as much as 2.6 per cent.
“The business environment is changing dramatically, such as the rapid changes of foreign exchange rates, raising interest rates, soaring materials prices and more,” Masahiro Yamamoto, an executive in charge of accounting, told reporters at an online earnings conference on Tuesday.
“A number of changes are occurring simultaneously that could affect the future of the broad automotive industry . . . It’s hard to look six months ahead,” added Kenta Kon, executive vice-president.
Toyota maintained its annual operating profit forecast of ¥2.4tn for the fiscal year through March, but the carmaker cut its output target for the year to 9.2mn vehicles from 9.7mn because of semiconductor shortages.
Toyota, which has kept its target to manufacture 3mn vehicles in Japan, enjoys larger benefits from the weaker yen than rivals who have shifted more of their production overseas. Still, executives said Toyota’s cost-cutting efforts were not able to offset the steep rise in raw material costs.
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