JAPAN: The benefits of the falling Japanese yen and a resurgence in output are projected to be virtually offset by the rising prices of parts and materials, according to expectations for Toyota Motor Corp.’s quarterly profit report due out on Tuesday.
The largest automaker in the world, based on sales, reported last week that production had increased 30% globally in the three months that ended in September.
However, it issued a warning that shortages of semiconductors and other components would continue to limit output in the coming months.
The second half of the current fiscal year could see the output rise as the auto chip scarcity situation gradually improves. Still, when Toyota reports profits, investors will focus on the demand outlook, other potential supply chain disruptions, and its electric vehicle strategy.
Toyota issued a warning earlier this month that it is unlikely to achieve its aim of producing 9.7 million vehicles during this fiscal year owing to a shortage of processors. It didn’t offer a fresh forecast.
According to the average prediction in a survey of 12 analysts conducted by Refinitiv, the business is anticipated to post an increase in operating profit from July through September of 3% to 772.22 billion yen ($5.3 billion), its highest level since the December quarter.
It will be the first profit increase in three quarters and a significant improvement from the June quarter’s sharper-than-expected 42% earnings decline, aided partly by the yen’s continued loss extension.
The value of Toyota’s international sales increased due to the yen’s approximately 30% decline against the dollar this year.
Following the first quarter results, Toyota changed its yen projection for the year from 115 to 130 yen, although the yen is currently trading substantially lower at roughly 146 to the dollar.
Rising input costs have outweighed the advantages of the low yen. Toyota predicted in August that annual material costs would total 1.7 trillion yen, a 17% rise.
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