Toyota Keeps Profit Outlook as Supply Chain Challenges Persist

Toyota Motor Corp. kept its profit outlook intact in the face of a stubborn component shortage and fading benefits from a weaker yen that boosts income brought home.

(Bloomberg) — Toyota Motor Corp. kept its profit outlook intact in the face of a stubborn component shortage and fading benefits from a weaker yen that boosts income brought home.

Operating profit is on track to reach ¥2.4 trillion ($18.3 billion) for the fiscal year ending March, the world’s largest automaker said Thursday. Analysts are projecting, on average, profit of ¥2.66 trillion for the period. Profit for the third quarter topped projections at ¥957 billion yen.

After 14 years at the helm, Chief Executive Officer Akio Toyoda is preparing to become executive chairman and cede his current role in April to Koji Sato, who runs the Lexus luxury-car division. Apart from keeping production intact while shortages persist for parts and semiconductors, Sato will have to guide Toyota into a new era of electrification and driverless vehicles.

Read more: Lexus Chief’s Ascension Comes at Make-or-Break Moment for Toyota

Sales for the 12 months ending March will be ¥36 trillion, in line with the prior forecast, the company said.

Sato will take over as production recovers from Covid-induced lockdowns, supply-chain snarls and component shortages. Toyota expects production to exceed pre-pandemic levels in 2023, forecasting output of as many as 10.6 million vehicles. At the same time, it warned that final shipments could be 10% lower if it is unable to procure enough parts, especially chips.

Toyota recently solidified its status as the world’s largest carmaker for the third consecutive year, having sold 10.5 million units in 2022, widening its lead over Volkswagen AG.

Read more: Toyota Keeps Title as No. 1 Carmaker for Third Straight Year

Shares in Toyota reversed losses and rose as much as 0.9% after the results. The stock is up about 6% this year, after declining 14% in 2022.

Although the weak yen helps Japan’s carmakers boost the competitiveness of vehicles sold abroad and the value of earnings brought back home, they don’t get as much benefit as they used to because the weaker yen also increases imported costs of raw materials and energy.

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