TOKYO – Toyota forecast a 20 per cent drop in profit for the current financial year on May 8 as the world’s largest carmaker braces for higher costs of raw materials because of disruptions stemming from the Iran war.
The company expects an operating income of 3 trillion yen (S$24.3 billion) in the year to March 2027, compared with a result of 3.77 trillion yen in the year just ended.
Toyota‘s outlook for the year was also well below the 4.59 trillion yen median forecast in an LSEG poll of 23 analysts.
Toyota, known for playing it safe when forecasting results, is bracing itself for a squeeze on the price and supply of crucial materials that could last for months. Toyota suppliers warned last week that they are starting to see shortages in key materials due to the Iran conflict, now in its third month. Toyota warned it would be difficult to make up for a negative 670 billion yen impact to its bottom line caused by regional turmoil.
With Toyota’s operating income on track to decline for three straight years, the trend reflects the company’s struggles to adapt to an ever-changing industry, chief financial officer Yoichi Miyazaki said in a post-results presentation. “The scope of our responses and measures we have taken have been largely limited to what can be implemented in the short term,” he said.
Toyota is forecasting 51 trillion yen in net sales for the current fiscal year, less than the 53.25 trillion yen predicted by analysts, and compares with 50.7 trillion yen for the just-ended period.
Toyota’s vehicle sales dipped slightly while production climbed in March, in a sign that its been able to shield itself from the more dire immediate effects of turmoil in the Middle East. Even so, operating profit for the three-month period that ended in March fell 49 per cent to 569.5 billion yen from a year earlier, the company said, due to tariffs and increased shipping costs.
Its latest results mark Kenta Kon’s first since he was appointed chief executive officer.
Toyota’s biggest suppliers are struggling with rising raw-material costs, shortages of aluminum, resins and other basic supplies and ongoing logistical snags. With barely any visibility on when supplies might run dry, its unclear how heavily this could impact production, or for how long.
Japan’s domestic carmakers import about 70 per cent of their aluminum from the Middle East, according to the Japan Automobile Manufacturer’s Association. The country as a whole imported around 590,000 tons of aluminum, or about 30 per cent of its total supply from the Middle East, in 2025 according to the Japan Aluminum Association. BLOOMBERG
