Toyota raises profit forecast to 3.9 trillion yen on hybrid demand

A higher profit outlook on hybrids and a weak yen

On Thursday, 5 November, Toyota lifted its net profit forecast for the year ending 31 March 2027 to 3.57 trillion yen from 3.25 trillion yen. Its operating profit forecast rose to 3.9 trillion yen from 3.4 trillion yen. The company credited strong sales of hybrid vehicles, especially in the United States, along with a yen that this summer fell to its weakest level in four decades. Even after the upgrade, the net profit estimate implies a 7.2% fall from the previous year. At the same time, the sales projection was cut to 53.5 trillion yen from 54 trillion yen.

Operating profit, previous forecast3.4

Operating profit, new forecast3.9

Net profit, previous forecast3.25

Net profit, new forecast3.57

Operating profit, previous forecast

3.4 trillion yen

Operating profit, new forecast

3.9 trillion yen

Net profit, previous forecast

3.25 trillion yen

Net profit, new forecast

3.57 trillion yen

Data from the article text

Results so far this year

Toyota posted its first April-September net profit increase in three years, up 26.1% to 2,236.4 billion yen, according to Jiji Press. First-half operating profit climbed 9.2% to 2,191.1 billion yen, and sales of 26,962.4 billion yen rose 9.5%, a sixth straight first-half high. Operating profit for July to September reached 1.13 trillion yen, up 34%, comfortably above the median forecast of 992 billion yen from nine analysts polled by LSEG. Over the first nine months, Toyota's sales volume fell 3.4% to 7.5 million units, which the Financial Times linked to the slump in China's car market. North American sales nonetheless rose 1.1% over the same period. The region's operating profit turned positive for the first time since US tariffs were introduced in Donald Trump's second term.

Actual, July-September operating profit1.13

LSEG analyst poll median0.992

Actual, July-September operating profit

1.13 trillion yen

LSEG analyst poll median

0.992 trillion yen

Data from the article text

Share reaction and buyback

Before the results were released, Toyota shares had already climbed around 8% as investors moved out of AI-related stocks and into blue chips following the US midterm elections. Trading in the afternoon pushed the gain past 14%, putting the stock on pace for its strongest single session since 2008. Gain figures varied between reports, from more than 14% in afternoon trade to almost 16%, and the Financial Times said the rally wiped out the year's losses. The move also reflected hopes that US tariffs on car imports could be cut after the midterms. Toyota additionally raised its share buyback to 1.3 trillion yen from 1 trillion yen.

Strategy: Chinese suppliers, robots and the keiretsu

Toyota said it would use the most competitive component suppliers in China, a step aimed at fighting back against Chinese EV rivals. Executive vice-president Yoichi Miyazaki set out the principle plainly.

“In procurement, we select the most suitable parts and technologies based on competitiveness, regardless of a supplier's nationality or corporate group.”

In the United States, the company plans to expand domestic hybrid production and bring in robots to contain rising labour costs. It will also pass lessons from China to suppliers in south-east Asia and Japan, which could mean more Chinese suppliers in its overseas supply chains. A planned robotics business is meant to speed up automation of its manufacturing lines and open a new revenue stream. Toyota's rise, and Japan's wider car industry, were built on the keiretsu system, in which producers and suppliers were bound by cross-shareholdings, intragroup financing and close management ties. These reforms add to signs that Japanese carmakers are pressing suppliers to match lower-cost Chinese rivals.

Cost pressures and the hybrid bet

Like other carmakers, Toyota has been hit by higher fuel prices triggered by the war in the Middle East. Takanori Azuma, its chief accounting officer, told a briefing that the group is countering this and rising raw material costs with more sales activity and lower expenses. Sales also slipped in China and the Middle East over the period. Unlike rivals that bet heavily on electric vehicles and later took write-downs running into billions of dollars, Toyota has focused mainly on hybrid technology, which it helped bring to market through the Prius decades ago. That approach has helped it hold its share in the United States despite competition from fast-moving Chinese EV makers elsewhere.