Hit by rising costs and supply snarls, Toyota profit tumbles 42%

TOKYO, Aug 4 (Reuters) – Toyota Motor Corp’s (7203.T) revenue slumped a worse-than-expected 42% in its first quarter because the Japanese automaker was squeezed between provide constraints and rising prices.

Working revenue for the three months ended June 30 sank to 578.66 billion yen ($4.3 billion) from 997.4 billion yen in the identical interval a 12 months in the past, Toyota mentioned on Thursday, capping a tricky interval. It has repeatedly reduce month-to-month output objectives as a result of world chip scarcity and COVID-19 curbs on crops in China.

The size of the earnings hit was far past expectations – analysts polled by Refinitiv had estimated a 15% drop – and appeared to catch traders abruptly. Shares of Toyota, the world’s largest automaker by gross sales, prolonged losses, sliding 3%.

“It is extraordinarily unhealthy,” mentioned Koichi Sugimoto, an analyst on the Mitsubishi UFJ Morgan Stanley Securities.

Whereas manufacturing snarls had already been flagged by the automaker, Sugimoto mentioned among the greater prices stood out.

The automaker mentioned rising materials costs value it 315 billion yen.

Regardless of the grim quarter, the automaker caught to its forecast for full-year working revenue and a plan to supply 9.7 million autos this fiscal 12 months, citing what it mentioned was robust residual demand.

A Toyota spokesperson mentioned the automobile firm would have the ability to procure the chips that had hampered manufacturing and anticipated staffing shortages at some home factories because of COVID-19 outbreaks to be resolved.

Manufacturing would choose up in direction of the second half of the monetary 12 months, the spokesperson mentioned.

Sugimoto, the analyst, mentioned provide issues regarded seemingly to enhance due to an easing in each the worldwide chips scarcity and the COVID-19 state of affairs in China.

Like different auto producers, Toyota is grappling with greater prices and fears that world inflation might put the brakes on client demand.

Toyota lifted its full-year internet revenue outlook by 4% to 2.36 trillion yen, helped by the weak spot of the yen, which suggests gross sales booked in abroad currencies develop into extra precious.

Nonetheless, the increase from the weaker yen was not adequate to totally offset the influence from rising materials prices, mentioned Seiji Sugiura, senior analyst at Tokai Tokyo Analysis Institute.

Toyota expects materials prices for the complete 12 months to extend by 17% to 1.7 trillion yen from its earlier estimate – the vast majority of that from the rising costs of metal and aluminium.

Toyota’s present manufacturing woes mark a departure from its preliminary success in navigating provide chain issues within the early levels of the pandemic.

The carmaker reduce its month-to-month manufacturing targets 3 times through the April-June quarter, falling 10% behind its preliminary objectives, because of shortages of semiconductors and the influence of COVID-19 lockdowns in China. learn extra

“We weren’t capable of produce sufficient, with prospects globally ready for his or her autos to be delivered,” the Toyota spokesperson mentioned.

Toyota shares, which have been down 0.5% simply earlier than the discharge of the earnings, closed down 3% at 2,091 yen, whereas the benchmark Nikkei 225 index (.N225) was barely firmer.

Toyota’s Japanese rival Honda Motor Co (7267.T) is about to report its first-quarter earnings subsequent week.

($1 = 133.7200 yen)

Reporting by Satoshi Sugiyama; Extra reporting by Noriyuki Hirata; Enhancing by Kenneth Maxwell, David Dolan and Tom Hogue

: .