Toyota sees 20% drop in annual profit as Iran war weighs

[TOKYO] Toyota halved its quarterly profit in an earnings report on Friday (May 8) and forecast a decline of 20 per cent in the year that just started, as rising costs and supply snarls from the Iran war outweighed surging demand for hybrid vehicles.

The results from the world’s top-selling automaker highlight the lopsided impact of the Middle East crisis, with higher energy prices driving more customers to fuel-efficient cars but not in enough numbers to offset underlying cost pressures.

Toyota reported an operating profit of 569.4 billion yen (S$4.6 billion) for the three months to Mar 31, compared with 1.1 trillion yen a year earlier. For the year that just started, it expects an operating profit of three trillion yen.

That outlook was well below the 4.59 trillion yen median forecast in an LSEG poll of 23 analysts. Toyota shares declined after the report and ended down around 2.2 per cent at their lowest close since mid-October.

In total, the impact of the Middle East crisis will be around 670 billion yen in the current financial year, Toyota said.

The latest surge in energy prices heaps further pain on an industry already grappling with US tariffs and the rise of Chinese automakers.

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Volkswagen CEO Oliver Blume said this week tariffs represent a burden of five billion euros (S$7.4 billion) a year on the German group’s operating profit.

Toyota said last week its sales in the Middle East fell sharply in March after shipments to the region were disrupted.

The outlook is the first issued by Toyota under new CEO Kenta Kon, who assumed his role last month and faces the challenge of steering the automaker through the impact of US President Donald Trump’s tariffs, which cut operating profit in the year just ended by 1.4 trillion yen. REUTERS