-- Toyota Motor (TYO:7203) warned that net income attributable to shareholders would slump 22% to 3 trillion yen in the fiscal year ending March 2027, as the world's largest automaker struggles to absorb shocks from the Middle East conflict.
Sales for fiscal year 2027 are predicted to inch up 0.6% to 51 trillion yen, according to Toyota's fiscal year 2026 results published Friday.
In a presentation accompanying its results, Toyota said the company may be unable to absorb the newly added impact from the Middle East.
Bloomberg noted, citing data from the Japan Automobile Manufacturer's Association, that Japan's domestic carmakers import about 70% of their aluminum materials from the Middle East.
"[W]e expect operating income to decline for the third consecutive year. We believe this is because our response to changes in the operating environment has been limited to measures that can be implemented in the short term, while progress on the business structure transformation that should be pursued from a mid- to long-term perspective remains only partway complete," Toyota said.
Toyota is targeting sales of 10.5 million Toyota and Lexus-branded vehicles in fiscal year 2027, boosted by strong demand at home. The company expects Japan sales to grow 25% next fiscal year, while overseas sales are forecast to decline 3%.
Meanwhile, production of these vehicles are predicted to grow to 10 million units from 9.9 million units in fiscal year 2026.
For the fiscal year ended March 31, 2026, Toyota's net profit plunged 19% year on year to 3.99 trillion yen, with earnings per share shrinking to 295.25 yen from 359.56 yen.
Sales rose 5.5% year on year to 50.69 trillion yen, which it attributed to increased vehicle sales volume and the effects of price revisions that offset the 1.4 trillion yen impact of US tariffs.
Operating income, however, tumbled 21.5% year on year to 3.77 trillion yen.
"Despite the impact of US tariffs, we were able to secure profits in line with our guidance due to increased vehicle sales volumes and the effects of price revisions underpinned by strong product competitiveness, as well as steadily accumulated improvement efforts such as expanded value chain revenues," Toyota said.
Consolidated vehicle sales in fiscal year 2026 rose to 9.6 million units from 9.4 million units in the previous year, on the back of strong demand in Japan and North America.
Toyota lifted its annual dividend for fiscal year 2026 to 95 yen per share from 90 yen per share a year earlier. It expects to raise its full-year dividend for the next fiscal year by 5 yen to 100 yen per share.