Toyota is expected to soon announce the fourth consecutive year-on-year decline in quarterly operating profit, despite demand remaining strong, especially for hybrid vehicles. And the reason is quickly explained: the positive effect of sales is not enough to offset the increase in raw material and labor costs. In particular, Reuters reports, among the factors cited by analysts are the consequences of U.S. tariffs on imports, which could squeeze margins along the production and distribution chain.
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Toyota heading for another profit decline
According to the median estimate of seven analysts surveyed by LSEG, Toyota is expected to record an operating profit of 813 billion yen (about 5.17 billion dollars) in the January-March quarter, down 27% compared to the previous year. This figure would push the annual operating profit towards a three-year low, around 4 trillion yen. This would be a level that highlights the pressure the Japanese group is exposed to even with high global production and sales volumes. The increase in wages along the entire supply chain, together with the cost dynamics related to the Middle East conflict, is indicated as a potentially penalizing factor for the accounts.
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The Middle East conflict weighs
Amid concerns, operators’ attention is also focused on Asia, considered among the regions most vulnerable to supply disruptions, being more dependent than others on imports of crude oil, gas, and other fuels from the Gulf. The conflict, which began on February 28, has already contributed to rising prices of materials such as aluminum and naphtha and has affected car shipments in the Middle East. Furthermore, Toyota sales in the region fell by almost a third in March, contributing to the second consecutive monthly decline in global sales.
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