Toyota’s earnings buffered by demand for its hybrids
TOKYO — Robust demand for hybrids is expected to underpin steady profits at Toyota when the world’s top automaker reports annual earnings on Thursday, although investors will be on high alert for any sign of a looming impact from US tariffs.
Investors will be paying close attention to how Toyota will factor in the hit from US President Donald Trump’s tariffs on its future profits, as the levies are expected to deal a heavy blow to car makers doing business in the US.
Another attention point will be what Toyota will say about Toyota Industries after the automaker confirmed last month that it was considering investing in a potential buyout of the key parts supplier.
“The focus is on the guidance for the fiscal year ending March 2026,” said Seiji Sugiura, a senior analyst at Tokai Tokyo Intelligence Laboratory. “I don’t know whether the Trump tariffs will be factored in or not.”
For the fourth quarter, the Japanese automaker is expected to deliver a 2-percent year-on-year rise in operating profit to 1.13 trillion yen ($7.86 billion) according to the average of seven analysts surveyed by LSEG, a result that would mark the first increase in three quarters.
Sales data have already indicated that momentum for the company has held up at the start of the year. Toyota’s global sales rose 5 percent in January-March versus a year earlier on solid demand in its top market, the United States, and Japan.
Bet on tech
Toyota’s operating profit for fiscal 2024 is set to come in lower than the prior year’s record one. In February, the automaker raised its operating profit forecast for the fiscal year just ended to 4.7 trillion yen, a result that would mark a 12-percent year-on-year drop.
Strong demand for its gasoline-electric hybrids such as the Prius and the Camry has vindicated Toyota’s bet on the technology but also presents a challenge for the automaker, as suppliers have been struggling to keep pace.
The company’s fiscal 2025 operating profit could face a hit of 800 billion yen due to the impact of the tariffs on Toyota’s US-bound exports from Japan, said Tokai Tokyo’s Sugiura.
The estimate does not factor in any broader impact from Trump’s tariffs, such as from a potential U.S. economic slowdown or on Toyota’s exports to the world’s biggest economy from Canada and Mexico, where it has production bases and makes some of its most popular models.
