Japan’s Toyota said Thursday its net profit for the third quarter fell eight percent, but it left its full-year forecasts unchanged as the cheaper yen offsets the impact of soaring materials prices.
The world’s top-selling carmaker, which reshuffled its executive line-up last month, reported a net profit of 727.9 billion yen ($5.6 billion), down from 791.7 billion yen a year earlier.
Although the company retained its title over Volkswagen last year, it is still suffering production setbacks caused by a chip shortage, along with other industry players, reports BSS.
“Dealers, suppliers and production sites worked hard under circumstances where production plans fluctuated greatly due to factors such as semiconductor shortages and natural disasters,” Toyota said in a statement on Thursday.
But it said it still expected to see net profit of 2.36 trillion yen in the 12 months to March 2023, down 17 percent on-year.
“We are absorbing the burden on our suppliers caused by soaring materials and energy prices in order that activities to strengthen competitiveness are installed widely and deeply across the entire supply chain,” it said.
For April-December, net profit dropped 18 percent to 1.90 trillion yen.
While operating profit fell in the nine months, it was up in the third quarter “as the positive effects of a weaker yen and volume increases exceeded the negative effect of soaring materials prices”, Toyota said.
Semiconductors are an essential component of modern cars, and Toyota has struggled to keep up with production targets simply because “there are not enough” chips to meet demand, Seiji Sugiura, senior analyst at Tokai Tokyo Research Institute, told AFP before the earnings release.
But Toyota is in a better position than many of its smaller rivals as it “has a strong bargaining power” with parts suppliers, Sugiura said.
China’s decision to end its zero-Covid policy and any economic stimulus measures from Beijing are also positive factors, with car sales there likely to rise, he added.
In January, Toyota set a confident 2023 production target of 10.6 million vehicles — higher than in recent years, including the nine million made in pre-pandemic 2019. Still, it warned that actual production could be 10 percent lower because of parts shortages, which have already forced it to slash targets for this year.
Toyota made a surprise shake-up of its leadership last month, replacing Akio Toyoda, whose grandfather founded the company, with 53-year-old Koji Sato as CEO. Toyoda, 66, will step aside to become board chairman as Sato — previously chief branding officer, and president of Toyota’s luxury Lexus brand — takes up the roles of chief executive and president.