CHIP SHORTAGES AND COVID CURBS LEAD TO 42 PERCENT DROP IN TOYOTA PROFITS

Thu 04 August 2022:

Toyota Motor Corp. reported a 42 percent drop in operating profits for the most recent quarter as the Japanese carmaker struggles with supply issues and rising prices, Reuters reported.

Toyota announced on Thursday that operating profit for the three months ended June 30 fell to 578.66 billion yen ($4.3 billion) from 997.4 billion yen ($7.45 billion) in the same period a year earlier, capping some trying months for the company.

It has repeatedly cut monthly production targets due to the global chip shortage and COVID-19 curbs on plants in China.

But the size of the earnings decline was far beyond what investors had expected – analysts polled by Refinitiv had estimated a 15 percent drop – and appeared to catch the market by surprise: Toyota’s shares extended losses and were down as much as 3 percent after the results.

Despite the grim quarter, the automaker stuck to both its forecast for full-year operating profit and its plan to produce 9.7 million vehicles this year.

Profit in the first fiscal quarter was hit by constraints in supply, lower sales and a rise in materials costs, a Toyota spokesperson said.

Toyota, like other automakers, is struggling with rising costs and fears that global inflation may slow consumer demand.

But compared to its early success in negotiating supply chain issues during the early phases of the epidemic, Toyota’s present production issues are a significant change.

Due to semiconductor shortages and the effects of COVID-19 lockdowns in China, the automaker reduced its monthly production targets three times during the April–June quarter, falling 10% behind of its original expectations.

Prior to the announcement of the earnings, Toyota shares were down 0.5 percent. After the announcement, they continued to decline and at 04:50 GMT, were down 2.3 percent at 2,106 yen ($15.74).

SOURCE: INDEPENDENT PRESS AND NEWS AGENCIES

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