The semiconductor shortage and increased costs have Toyota surprisingly brought in a sharp drop in profits. While sales rose sharply in the second fiscal quarter due to the falling yen, operating profit fell by a quarter to 562.7 billion yen (3.8 billion euros), as the world’s largest automaker announced on Tuesday.
The group missed the expectations of analysts, who had expected a small increase in profits. It’s the fourth straight decline in quarterly profit. The share then lost 2 percent in value in an unchanged environment.
“The business environment is changing dramatically, such as rapid changes in exchange rates, rising interest rates, rising material prices and more,” said Toyota Chief Accounting Officer Masahiro Yamamoto. Nevertheless, the board of directors stuck to the forecast of an operating result of 2.4 trillion yen for the financial year.
With its quarterly balance, world market leader Toyota performed worse than its rival Volkswagen, which had increased operating profit by two-thirds from July to September. The German group benefited from the fact that it can hardly meet the high demand due to the lack of chips and, above all, sells high-yield vehicles. Due to the easing of supply chain problems, however, the proportion of high-volume vehicles, from which mass manufacturers such as VW earn less, is now increasing.
Toyota announced last week that production had recovered by 30 percent in the period July to September. At the same time, however, the Japanese carmaker warned that the lack of semiconductors and other components would continue to burden production in the coming months. The group has now reduced its production target of 9.7 million vehicles for the 2022/23 financial year ending in March to 9.2 million units. In the past financial year, 8.6 million vehicles rolled out of the Group’s factories worldwide.
During the corona pandemic, Toyota managed the parts shortage better than its competitors in Europe and the United States. For several months, however, the bottlenecks have been clearly noticeable. The Japanese model company had to lower its production targets several times.