Toyota’s operating profit drops 20% over surge in raw material prices
Automobile dealers should expect a hike in prices of Toyota products as Toyota executives have warned of a 20 percent drop in annual operating profit, blaming a doubling in raw material prices linked to the coronavirus pandemic and higher energy costs.
The weaker-than-expected guidance prompted shares in Toyota to drop 4.4 percent on Wednesday, even as the world’s largest carmaker churned out the highest-ever operating profit for a Japanese company for the fiscal year ended March 31.
Toyota projected an operating profit of ¥2.4tn ($1bn) that year, well below analyst forecasts of a ¥3.3tn profit, according to S&P Global Market Intelligence.
The group, which includes Toyota’s Daihatsu and Hino subsidiaries, expected to sell 10.7mn vehicles this year, compared with 10.3mn units last year.
Executives said the weaker yen and high vehicle sales were unlikely to offset annual raw material costs, expected to hit ¥1.45tn — more than twice the costs of last year, which were also an all-time high.
The sharply conservative outlook shocked investors after the carmaker outperformed rivals throughout the pandemic, using stringent cost cutting measures to offset supply chain disruptions and plant closures.
Toyota posted an operating profit of ¥463bn for the fourth quarter, down 33 percent year on year. Its revenue reached ¥8.1tn, up 6 per cent.