Toyota profit drops on chip shortage

PRODUCTION LAG:
The Japanese automaker also had to contend with flooding in South Africa and COVID-19 lockdowns in Shanghai, which affected manufacturing

Toyota Motor Corp’s profit fell nearly 18 percent in the April-June quarter from a year earlier, as a semiconductor shortage that has slammed the auto industry dented production at Japan’s top automaker.

Toyota yesterday reported a quarterly profit of ¥736.8 billion (US$5.49 billion), down from ¥897.8 billion the previous year.

Quarterly revenue increased 7 percent to ¥8.49 trillion.

Photo: Bloomberg

Toyota officials apologized to customers who have been waiting for their cars after putting in orders. Some have waited so long the vehicle went through a model change in the meantime.

Various problems apart from the chips shortage have hurt production, such as flooding in South Africa and COVID-19 pandemic lockdowns in Shanghai, the Toyota City-based manufacturer said.

Electric vehicles, which need many chips, have been the worst hit by the global chips crunch. Rising material costs also hurt Toyota’s bottom line.

The negatives offset the perks of a weaker Japanese yen. A cheap yen benefits Japanese exporters like Toyota by boosting the value of their overseas earnings when they are converted into yen.

The favorable foreign exchange rate increased Toyota’s operating income for the quarter by ¥195 billion, the company said.

Toyota sold about 2 million vehicles during the quarter, down from 2.1 million vehicles in the same period last year.

However, it kept unchanged its full fiscal year forecast to produce 9.7 million vehicles, saying output would pick up in the months ahead.

Toyota posted record earnings in the last fiscal year through March, racking up a profit of ¥2.85 trillion, up nearly 27 percent year-on-year.

For the fiscal year through March next year, it is forecasting a profit of ¥2.36 trillion. The projection was revised upward from an earlier estimate of ¥2.26 trillion.

Toyota said it did not include numbers from its group truck maker Hino Motors Ltd because Hino had not released a forecast.

Earlier this week, Hino acknowledged it had been falsifying emission and mileage data for 20 years, and apologized for betraying its customers’ trust.

It has promised to prevent a recurrence.

Toyota, which makes the Prius hybrid, Lexus luxury models and Camry sedan, expects to sell 10.7 million vehicles worldwide in the fiscal year through March next year, up from nearly 10.4 million vehicles in the previous fiscal year.

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