TOKYO: Toyota Motor posted a 17% increase in first-quarter profit, as cost-cutting and a weaker yen helped offset lower sales and a decline in production at home.

The world’s top-selling automaker said yesterday operating profit for the three months through June totalled 1.3 trillion yen or about US$8.7bil, matching the average of six analyst estimates compiled by LSEG.

But with that growth being the weakest in seven quarters, the results disappointed investors who had been betting the automaker would do better.

Shares in Toyota, which declined more than 5% before the earnings figures were released, extended losses and were down 8% at 2,712 yen in Tokyo.

Toyota has been on a record profit run that has boosted its share price. But its outlook has been complicated by a tough market in China and the fallout from a safety-certification scandal.

“Despite the inability to maintain stable production in Japan due to factors such as certification issues and recalls, we achieved an increase in profit thanks to the support of all our stakeholders,” Toyota said.

Retail sales of Toyota and luxury Lexus brand cars declined 2% in the quarter, with the share of petrol-electric hybrids in sales reaching about two fifths.

Toyota, a pioneer in hybrid technology, has benefited as demand for EVs has slowed in markets such as the United States.

The automaker maintained its forecast of 4.3 trillion yen profit for the full year, versus a 5.3 trillion yen average of 18 analyst estimates.

Toyota has been grappling with a series of scandals at group firms over botched product certification-test procedures that are undermining its reputation for safety and quality.

The Transport Ministry ordered it on Wednesday to take drastic steps to prevent a recurrence of misconduct after discovering new wrongdoing in certification procedures.

It is also struggling with inventory issues in the United States.

“We still haven’t built up enough of an inventory yet in the United States, however compared with last year, there’s no doubt that it is recovering,” said Masahiro Yamamoto, chief officer of Toyota’s accounting group.

 - Reuters