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Toyota sees first profit drop in five years

May 11 2016 09:30
Craig Trudell and Yuki Hagiwara

Tokyo - Toyota said annual net income will probably decline for the first time in five years, as currency swings that had spurred record profits now pose stiff headwinds.

Net income may drop 35% to ¥1.5trn for the fiscal year ending in March, Japan’s largest company said in a statement on Wednesday. The forecast trailed the ¥2.19trn average of 23 analysts’ estimates compiled by Bloomberg.

President Akio Toyoda has presided over three straight years of record annual profit, as a weakening yen boosted earnings from Japan-exported Corolla compacts and Lexus RX SUVs sold overseas.

As the currency has strengthened more than 10% versus the dollar this year and US demand growth stalls, the automaker is now racing to recover from production disruptions to keep ahead of Volkswagen by worldwide sales.

The automaker expects effects of foreign exchange rates to reduce operating profit by about ¥935bn in the year started April 1. Toyota plans to buy back up to 3.42% of its shares for as much as ¥500bn.

toyota  |  industrial
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