March 5, 2021

Toyota Raises Profit Forecast by Nearly 40 Percent

TOKYO — Citing a quicker-than-expected recovery from Japan’s devastating earthquake, Toyota Motor raised its full-year profit forecast by almost 40 percent on Tuesday, though it warned that a strong yen continued to weigh on its bottom line.

The world’s largest automaker said it expected a net profit of 390 billion yen, or $5 billion, for the business year that ends March 31, 2012, compared to an earlier forecast of 280 billion yen.

The revised estimate came as Toyota posted a 1.1 billion yen net profit for the April-June quarter, a tiny fraction of the 190.4 billion yen it earned a year earlier.

Japanese automakers have staged an impressive recovery from the magnitude 9.0 earthquake and tsunami that hit Japan on March 11, which damaged factories and severed supply chains vital to auto production.

Manufacturers are also contending with electricity shortages brought about by crippled or idled power plants.

Toyota plants in Japan were halted for about two weeks after the quake. In April, the automaker started production at all of its domestic factories, but at a sharply reduced capacity.

Since then, the recovery has been impressive, as parts makers swiftly repaired their factories or switched production lines. Toyota now expects to lose 150,000 units in global output because of the March quake, compared with an earlier estimate of 450,000 units, according to Bloomberg.

Robust sales elsewhere in Asia were also contributing to Toyota’s recovery, the automaker said in a statement.

Still, the dollar’s drop against the yen to near-record lows is eating into profit at Japanese exporters. A strong yen makes Japanese exports like cars and electronics more expensive overseas, and therefore less competitive. The higher yen also erodes the value of Toyota’s overseas earnings when repatriated into the home currency.

Toyota shares fell 0.3 percent to 3,160 yen at the close of trading in Tokyo, before the earnings were announced. The shares have dropped over 10 percent since the quake.

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