Toyota Motor Corp is projecting a 35 per cent plunge in profit for the fiscal year through March 2017, as the perks of a favourable exchange rate fade, and it reported a four per cent drop in profit for January-March on-year at ¥426.6 billion ($3.9 billion).
The Japanese automaker is expecting ¥1.5 trillion ($13.8 billion) in annual profit, a reversal after three straight years of record profits. That number could fare worse as it doesn't account for recent production stops over supply shortages caused by a major earthquake in southwestern Japan.
Toyota, which makes the Prius hybrid, Camry sedan and Lexus luxury models, has had record profits for three years straight. But the perks from a weak currency that are a boon for Japan's exporters like Toyota have dwindled in recent months.
For the fiscal year ended in March, Toyota's profit totalled ¥2.3 trillion ($21 billion), up 6.4 per cent from the previous year, when it had recorded a ¥2.2 trillion profit. January-March sales fell two per cent to ¥6.9 trillion ($63 billion). Sales for the fiscal year gained four per cent to ¥28.4 trillion ($261 billion).
Toyota executive vice-president Takahiko Ijichi said cost cuts and a cheap yen had helped results for the fiscal year through March this year, offsetting falling vehicle sales, labor costs and research expenses.
Toyota is headquartered in central Japan but Kyushu, the main island in southwestern Japan, is a hub for its manufacturing. The region was struck by a magnitude 6.5 quake April 14, and by a 7.3-magnitude temblor barely two days later.
Toyota suspended production on most of its assembly lines in Japan between April 15 and 23 because of parts shortages. Some production resumed later in April, and all operations had resumed as of May 6, following national holidays that lasted about a week, according to Toyota.
Toyota, the No. 1 automaker in global vehicle sales, sold 8.7 million vehicles for the fiscal year through March, down from nearly nine million vehicles the previous fiscal year. Sales fell in Japan, the rest of Asia and Europe, with North American the only major market to see rising vehicle sales.
The company expects its global vehicle sales to recover in the fiscal year through March 2017 to 8.9 million vehicles.
Toyota was in a neck-and-neck race against Volkswagen for the crown of world's biggest automaker until Volkswagen was hit by an emissions-cheating scandal last year. US rival General Motors Co led the industry for more than seven decades until Toyota surpassed it in 2008.