Toyota hikes profit forecasts on strong demand, weak yen

Automaker Toyota increased its profit predictions for the year, citing robust demand for hybrid vehicles and a weak yen, while still facing intense competition from Chinese manufacturers. For the remainder of 2026 to the end of March 2027, the company anticipates a net profit of 3.57 trillion yen, a rise from its previous estimation in August of 3.25 trillion yen, though it still forecasts a 7.2 percent year-over-year decrease.

Toyota's sales have held strong, fueled primarily by the popularity of hybrid vehicles, particularly in the United States, and by the yen's depreciation, which has reached its lowest point in four decades this summer. Analysts' expectations were not met by the forecast, yet Toyota's stock price surged by more than 15 percent following the announcement.

The company also projected operating profit of 3.9 trillion yen, up from its earlier prediction of 3.4 trillion yen. Toyota, the world's largest automaker by sales, cited its ability to offset the effects of increasing material costs and production disruptions due to earthquakes and floods at production sites, alongside optimized global supply, as reasons for the forecast revision.

Despite these positive developments, the company's second quarter results were underwhelming, with its net profit falling 18.5 percent year-on-year to 759.4 billion yen, a significant drop from expectations, hampered by more expensive materials and other contributing factors. However, its quarterly revenue grew by 8.6 percent year-on-year to 13.4 trillion yen, thanks to a rise in unit sales in Japan and Europe and stabilization in North America, despite the imposition of tariffs by Washington.

For the fiscal year 2026-2027, which concludes in late March, Toyota anticipates revenue to increase by 5.6 percent year-on-year to 53.5 trillion yen, a number that was marginally reduced on Thursday. The automaker admitted to a "challenging competitive environment," with particularly sharp declines in unit sales in China, down 23 percent year-over-year in August.