Toyota Motor Corporation, the world’s largest automaker by sales volume, reported a 28% year-on-year decline in operating profit for the fiscal third quarter ending December.
Despite the drop, the company raised its full-year operating profit forecast, signaling confidence in cost-cutting efforts and product improvements.
- Revenue: 12.39 trillion yen, slightly surpassing the 12.1 trillion yen forecast by analysts.
- Operating Profit: 1.22 trillion yen, falling short of the 1.39 trillion yen estimate.
- Net Income: Jumped 62% year-on-year to 2.19 trillion yen from 1.36 trillion yen, driven by higher revenue and strategic initiatives.
This marked Toyota’s second consecutive quarterly decline in operating profit, following a 20% drop in the previous quarter. Consolidated vehicle sales for the third quarter also fell to 2.44 million units from 2.55 million units a year ago.
In a strategic move to boost its electric vehicle (EV) presence, Toyota announced the creation of a wholly-owned subsidiary in Shanghai, China, dedicated to developing and producing battery electric vehicles (BEVs) for the Lexus brand. Production is expected to begin in 2027 with an initial capacity of 100,000 units per year.
Toyota’s announcement comes as it seeks to catch up with competitors focused on fully electric vehicles in the Chinese market, where local automakers like BYD have gained significant ground.
Operating income in North America, Toyota’s largest market, declined by 63% over the first nine months of the fiscal year, impacted by higher personnel costs and reduced sales volume. Asia also saw a profit decline, largely due to increased marketing expenses amid intensified competition from Chinese brands.
However, Toyota continues to benefit from strong hybrid vehicle demand in markets such as the US, even as competition in the global automotive sector intensifies.
Despite the quarterly challenges, Toyota raised its annual operating profit forecast by 9% to 4.7 trillion yen, citing efforts to stabilize production, manage incentives, and leverage a weaker yen. The company maintained its full-year dividend forecast at 90 yen per share, up from 75 yen the previous year.
Shares of Toyota rose 1.4% in Tokyo following the announcement, buoyed by the optimistic full-year profit guidance.
With input from CNBC, the Financial Times, the Wall Street Journal, and Reuters.
