Toyota Motor Corporation posted a 20% year-on-year decline in its operating profit for the second quarter, marking its first such drop in nearly two years.
The world’s largest automaker by sales volume reported operating profit of 1.16 trillion yen ($7.55 billion) for the three months ending September 30, falling short of the 1.24 trillion yen figure analysts had expected.
The decrease in operating profit comes amid weaker global sales and production, as Toyota faces increasing competition, particularly in the electric vehicle (EV) market. In addition to this drop in operating profit, net profit for the quarter more than halved, falling to 573.7 billion yen ($3.78 billion) from 1.28 trillion yen a year ago, significantly missing the analyst estimate of 1.01 trillion yen.
Toyota’s total revenue for the quarter edged up slightly by 0.1%, reaching 11.44 trillion yen, just above the forecast of 11.41 trillion yen. However, the company’s vehicle sales volume for the period dropped 3.8% to 2.74 million units, compared to 2.84 million in the same quarter last year.
Despite the challenges, Toyota maintained its full-year operating profit forecast at 4.3 trillion yen and raised its dividend outlook to 90 yen per share, up from 75 yen a year ago.
Toyota has been slower than some competitors in embracing fully battery-powered electric vehicles, opting instead for a more gradual shift with a focus on hybrid models. The automaker has defended its approach, with Chairman Akio Toyoda warning that a shift to electric-only vehicles could lead to job losses, particularly among those in engine-related roles within Japan’s automotive industry.
The company’s results were also impacted by special losses tied to its subsidiary, Hino Motors, which faced certification issues in North America. Additionally, Toyota has been contending with price competition from Chinese automakers in key markets like China, which has further pressured its bottom line.
In terms of its EV strategy, Toyota has seen a slight increase in electric vehicle sales. The company sold about 35,000 battery EVs in the second quarter, up from around 30,000 in the same period last year. Electric and hybrid vehicles now account for 46% of total Toyota and Lexus vehicle sales, up from 36% a year ago.
For the full fiscal year ending March 2025, Toyota still expects its total vehicle sales to fall by 2.2% to 10.85 million units, slightly more than its previous forecast of a 1.3% drop. Revenue is expected to rise by 2% to 46 trillion yen, while net profit is forecast to decline by 28% to 3.57 trillion yen.
Despite the profit dip, Toyota’s shares rose 1% on the day of the earnings announcement, in line with broader market trends.
Reuters, CNBC, and the Wall Street Journal contributed to this report.
