Toyota Motor Corporation is expected to report steady profits for the fiscal year, driven by robust demand for its hybrid vehicles.
However, investors remain cautious about the potential impact of US tariffs on future earnings when the world’s largest automaker announces its annual results on Thursday.
With US President Donald Trump’s tariffs posing a significant challenge for automakers operating in the United States, analysts are keen to see how Toyota plans to mitigate the anticipated financial hit.
“The focus is on the guidance for the fiscal year ending March 2026,” said Seiji Sugiura, senior analyst at Tokai Tokyo Intelligence Laboratory. “I don’t know whether the Trump tariffs will be factored in or not.”
For the fourth quarter, Toyota is projected to report a 2% year-on-year increase in operating profit, reaching 1.13 trillion yen (£6.02 billion), according to an LSEG survey of seven analysts.
This would mark Toyota’s first quarterly profit increase in three quarters. The automaker’s global sales have remained strong, with a 5% rise year-on-year in the January-March period, driven by high demand in its primary markets, the United States and Japan.
Toyota had earlier raised its operating profit forecast for fiscal 2024 to 4.7 trillion yen, despite this figure representing a 12% decline from the previous year.
The anticipated downturn reflects challenges related to the supply of gasoline-electric hybrids like the Prius and Camry, which remain popular despite supplier struggles to meet demand.
The company could face a further profit reduction of up to 800 billion yen in fiscal 2025 due to tariffs affecting exports from Japan to the US.
This estimate does not account for broader economic impacts or the effect on exports from Toyota’s Canadian and Mexican manufacturing bases.
In response, Toyota has maintained normal operations while focusing on reducing fixed costs rather than increasing car prices.
Industry insiders suggest that Toyota may consider producing the next generation of its RAV4 SUV in the US to minimise tariff risks and meet rising demand. Toyota’s shares have fallen 13% this year, underperforming the Nikkei 225 index, which has declined by 8% over the same period.
Another key issue for investors is Toyota’s potential involvement in a buyout of Toyota Industries Corporation, a major supplier and former parent company.
Any investment in the nearly century-old company could be perceived negatively by the market, while efforts to address cross-shareholding concerns may be viewed favourably.
As of September, Toyota owned approximately 24% of Toyota Industries, which itself held about 9% of Toyota Motor and over 5% of Denso Corporation, another key supplier.
Analysts will also be monitoring Toyota’s stance on cross-shareholdings amid increasing regulatory pressure on Japanese firms to reduce stakes in affiliated companies. Head of mobility research at Macquarie, James Hong, noted that investors would be watching closely to assess the market impact of any potential buyout or strategic shift.
Boluwatife Enome
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