Toyota raises forecast, plans stock buyback
Toyota revised its annual operating profit forecast upwards to ¥3.4 trillion for its fiscal year ending March 2027 (a 13% increase from its earlier projection of ¥3 trillion), lifting net profit target to ¥3.25 trillion and revenues to ¥54 trillion. This is attributed to a weaker yen (revised to 160 yen to the dollar), which boosts overseas earnings, and robust hybrid demand. Toyota announced a share buyback of up to ¥1 trillion ($6.3 billion) over the next year to enhance shareholder returns, a move designed to support earnings per share. It covers up to 4.22% of outstanding stock, with 200 million shares to be cancelled. Despite positive forecasts, Toyota's stock declined notably in Tokyo trading after the announcements. Investor reaction stems from concerns in its latest financial report. Its first-quarter operating profit fell 8.8% year-on-year to ¥1.06 trillion, the fifth consecutive quarterly decline, a worrying trend, falling below market expectations. Toyota reported slumping sales in key markets, with China sales tumbling 28% amid fierce competition, and Middle East sales dropping by a third. The company revised down its EV sales target by 10.9% to 533,000 units, reflecting a conservative outlook due to slower market adoption. Additionally, the revised annual profit outlook does not yet account for a recent earthquake's full impact in Japan's Kyushu island, which caused production disruptions at several key manufacturing plants. These factors collectively contributed to heightened investor apprehension, overshadowing the positive forecast and share buyback.
