Toyota Motor Corp’s profit climbed in the latest quarter, after a weak yen and robust demand in North America boosted sales. 

Operating profit was ¥1.31 trillion (US$8.7 billion or RM39.98 billion) for the April-June period, up 17% from a year earlier, the world’s biggest carmaker said on Thursday. That was mostly in line with the ¥1.32 trillion projected, on average, by analysts. The operating profit forecast for the fiscal year was kept the same, at ¥4.3 trillion.

Hybrids are selling well in North America, making up for sluggish demand for Toyota’s vehicles in Japan and China. At the same time, a weaker yen is helping to boost income in the carmaker’s home currency. Despite ongoing turmoil from a government probe that found seven of its cars weren’t properly certified for mass production, analysts are still projecting the carmaker to post a record profit this year of ¥5.3 trillion.

“Quarterly results were no surprise, but there were expectations that Toyota would raise its full-year forecast,” said Bloomberg Intelligence senior auto analyst Tatsuo Yoshida. “It depends on second-quarter results, but there’s a high probability it will be revised during the first half of the fiscal year.”

Revenue for the latest quarter rose 12% to ¥11.8 trillion. For the fiscal year, Toyota kept its revenue outlook the same, at ¥46 trillion.

This week, Toyota was dealt its first ever corrective order by Japan’s Transport Ministry, after a government investigation found that seen of its car models weren’t properly tested for mass production. The order is the latest development in a series of fraudulent behaviours that began with a pair of Toyota subsidiaries half a year ago, then last month at the carmaker itself.

Although profits are seen on track, there are signs of underlying weakness. The carmaker’s global sales fell 4.7% to 5.2 million units in the first six months of 2024, most prominently in Japan and China. That was due in large part to broad recalls of the Prius and other models, as well as intense competition from electric vehicle (EV) makers such as China’s BYD Co.

Toyota has pledged to sell 1.5 million battery EVs annually by 2026, and 3.5 million by 2030. Asked whether the recent rebound in hybrids might warrant or justify a shift in strategy, Toyota said it had no plans to do so at this time.

“Compared to last year, the situation is completely different now,” Masahiro Yamamoto, the chief officer of the accounting group, told reporters. “We don’t know what it will look a year from now.”

Toyota’s share price was down around 9% in late afternoon trading in Tokyo, in line with a broader sell-off in the Tokyo Stock Exchange. Shares in Japanese companies fell as traders brace for further rate bikes by the Bank of Japan (BOJ), the day after it raised interest rates to around 0.25% on Wednesday.

“Investors have to price in the risk of a stronger yen going forward,” as the BOJ moves to normalise its monetary easing, said Takehiko Masuzawa, the head of equities trading at Phillip Securities Japan. With downward pressure from the currency move and the sell-off in Japanese equities, he added that it’s difficult to buy the stock unless its earnings look favourable.

  - Bloomberg