Toyota posts first profit gain in six quarters, lifts annual outlook as hybrid sales shine

Toyota reported its first profit gain in six quarters and elevated its annual outlook by 15% on Thursday (Nov 5), as a weaker yen and robust demand for higher-margin hybrid vehicles offset declines in China and Middle Eastern sales. The outcome propelled Toyota's shares to soar in Tokyo trade, while the results reinforced the automaker's belief that its emphasis on hybrids was proving beneficial.

The world's largest automaker forecast operating profit of 3.9 trillion yen (US$24.6 billion) for the fiscal year ending March, following a 34% surge in income for the July-September quarter. Unlike competitors who have heavily invested in electric vehicles and faced significant write-downs when demand weakened, Toyota has primarily concentrated on enhancing petrol-electric hybrid technology, which it pioneered decades ago with the Prius.

This approach has been crucial to defending its market share in the US and countering the surge of Chinese EV manufacturers in other regions. Nevertheless, Toyota, like other automakers, has been affected by higher fuel prices resulting from the conflict in the Middle East. Toyota's Chief Accounting Officer, Takanori Azuma, mentioned during a briefing that the company is mitigating the impact of the Middle Eastern situation and rising material costs through sales efforts and cost reductions.

Toyota's shares had risen by approximately 8% prior to the announcement, as investors shifted funds from AI-related stocks to blue-chip companies following the US midterm elections. They then continued to climb, surpassing a 14% gain in the afternoon session, positioning the stock for its largest one-day increase since 2008. For the July-September quarter, operating profit amounted to 1.13 trillion yen, surpassing the median forecast of 992 billion yen from a poll of nine analysts polled by LSEG.