Toyota's profits fall for first time in 5 years

The automaker's profits fell, and it warned of more to come if the Japanese currency continues to strengthen.

Photo by: AFP
Photo by: AFP

Akio Toyoda, president of auto giant Toyota Motor, at a press conference in Tokyo announcing the group's 2017 financial results on May 10, 2017.

Japanese car maker Toyota said on Wednesday that its annual net profit fell for the first time in five years with the company warning that there would be more declines due to a stronger yen.

The Corolla and Prius hybrid maker posted a profit of 1.83 trillion yen ($16 billion) on a slightly lower revenue of 27.6 trillion yen for the recently ended year to March.

This is down from a record 2.31 trillion yen ($20 billion) net profit the previous year.

Toyota, which lost its spot last year to Volkswagen as the world's top-selling automaker, expects a net profit of 1.5 trillion yen ($13 billion) in the current year to March 2018, which is way off market expectations of around 1.9 trillion yen ($17 billion).

Vehicle sales in the past fiscal year increased to 10.25 million units from 10.19 million vehicles a year earlier.

Unit sales in the key North American market remained flat, while Toyota registered an increase in Europe, Japan and the rest of Asia. 

Demand dropped in Central and South America, Africa and the Middle East, it said.

Japanese exporters, including major automakers like Toyota and Nissan, have benefited in recent years from a sharp drop in the yen.

A weaker yen boosts the bottom line by making their products relatively less expensive overseas, while inflating the value of profits earned abroad.

But this past fiscal year has seen sharp moves in the currency, with the Japanese unit surging after Britain's shock vote to exit the European Union boosted demand for the yen as a safe haven currency.

The trend briefly reversed course after billionaire Donald Trump's November US presidential election win fanned expectations that his big-spending, tax-cutting agenda would fire up inflation and push the Federal Reserve to hike interest rates.  A rate hike tends to lift the dollar against other currencies.

TRTWorld and agencies