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Toyota sees first profit drop in five years on yen strength
[TOKYO] Toyota Motor Corp. said annual net income will probably decline for the first time in five years, as currency swings that had spurred record profits now pose stiff headwinds.
Net income may drop 35 per cent to 1.5 trillion yen (S$18.9 billion) for the fiscal year ending in March, Japan's largest company said in a statement Wednesday. The forecast trailed the 2.19 trillion yen average of 23 analysts' estimates compiled by Bloomberg.
President Akio Toyoda has presided over three straight years of record annual profit, as a weakening yen boosted earnings from Japan-exported Corolla compacts and Lexus RX SUVs sold overseas. As the currency has strengthened more than 10 per cent versus the dollar this year and US demand growth stalls, the automaker is now racing to recover from production disruptions to keep ahead of Volkswagen AG by worldwide sales.
The automaker expects effects of foreign exchange rates to reduce operating profit by about 935 billion yen in the year started April 1. Toyota plans to buy back up to 3.42 per cent of its shares for as much as 500 billion yen.