Toyota's Profit Rises 17% Despite Challenges

Japanese carmaker TOYOTA Motor said it posted a 17 per cent rise in first-quarter operating profit, as the Japanese automaker got a boost from cost reduction efforts and a weak yen that helped offset lower sales and production volume at home.

The world’s top-selling automaker said operating profit for the three months through June totalled 1.3 trillion yen, matching the average of six analyst estimates compiled by LSEG.

“Despite the inability to maintain stable production in Japan due to factors such as certification issues and recalls, we achieved an increase in profit thanks to the support of all our stakeholders,” Toyota said in a statement.

The automaker’s challenges include a tough market in China and fallout from a certification scandal, which has also involved Toyota and Lexus-branded cars and hurt sales in Japan.

Its consolidated vehicle sales declined 3 per cent in the quarter, presentation materials showed, with the share of petrol-electric hybrids in sales reaching about two fifths.

Toyota maintained its forecast of 4.3 trillion yen profit for the full year, versus a 5.3 trillion yen average of 18 analyst estimates.

The automaker is grappling with a series of scandals at group firms over botched product certification test procedures that are undermining its reputation for safety and quality.

The transport ministry ordered Toyota to take drastic steps to prevent a recurrence of misconduct after discovering new wrongdoing in certification procedures.

Toyota’s share price, which was down 5.5 per cent just before the earnings release, fell further immediately afterward and was down 8.4 per cent at 2,702 yen.

Toyota has benefited from a slowdown in global demand for electric vehicles, allowing it to sell more hybrids, which typically command higher margins than regular gasoline cars.