Toyota cuts profit forecast on yen strength despite robust first quarter
Toyota has warned that its annual operating profit will fall for the first time in four years as the US-China dispute drives the yen higher.
The guidance cut came even as Japan’s biggest carmaker has been overhauling its cost structure and despite a robust first quarter driven by increased vehicle sales in Japan, Europe and other parts of Asia.
For the fiscal year through March 2020, Toyota said it now expects an operating profit of ¥2.4tn ($22bn), a figure 5.9 per cent lower than its May projection which would represent a 2.7 per cent decline from a year earlier. It also cut its revenue forecast by 1.7 per cent.
The Japanese group blamed the downgrade on the stronger yen as it revised its currency forecasts to a rate of ¥106 against the dollar and ¥121 against the euro, compared with earlier forecasts of ¥110 and ¥125, respectively.
Japanese businesses are bracing for a further appreciation in the yen, which erodes the value of overseas sales and profits, as the trade dispute between the US and China escalates.
For the April to June quarter, Toyota said its net profit increased 3.9 per cent from a year earlier to ¥683bn on a 3.8 increase in revenue.
Shares in Toyota fell as much as 3.1 per cent after it cut its guidance.