Toyota’s first quarter earnings falls due to supply difficulties and rising prices

Due to supply constraints and rising expenditures, Toyota Motor Corporation’s first-quarter profitability decreased by 42 percent, which was worse than anticipated.

As a result of supply restrictions and increased expenses, Toyota Motor Corp.’s earnings for the first quarter fell by 42 percent, which was worse than anticipated.

Toyota announced on Thursday that its operating profit for the three months ended June 30 fell to 578.66 billion yen ($4.3 billion) from 997.4 billion yen in the same time last year, capping a difficult period. Due to the worldwide chip scarcity and COVID-19 restrictions in China, it has frequently reduced its monthly manufacturing targets.

Analysts surveyed by Refinitiv had predicted a 15 percent reduction in profits, but the magnitude of the loss appeared to catch investors by surprise. Toyota’s stock continued to decline, falling 3%.

Despite the dismal quarter, the manufacturer maintained both its full-year operational profit prediction and its intention to produce 9.7 million vehicles this year, citing robust residual demand.

A Toyota spokeswoman stated that the company’s quarterly profit was impacted by supply bottlenecks, fewer sales, and higher material prices.

“We were unable to create enough, leaving consumers throughout the world waiting for their automobiles,” the representative explained.

The representative stated that delivery timeframes for electric vehicles are greater since they require more chips.

Toyota, like other automakers, is dealing with increasing expenses and worries that global inflation will dampen consumer demand.

It anticipates material costs for the entire year to grow by 17 percent to 1.7 trillion yen, up from its prior forecast of 1.4 trillion yen, with the majority of the increase attributable to a spike in the cost of steel and aluminum.

However, Toyota’s recent manufacturing challenges represent a change from its early success in overcoming supply chain issues during the early stages of the epidemic.

Due to chip shortages and the impact of COVID-19 lockdowns in China, the automaker reduced its monthly production objectives three times during the April-June quarter, falling 10 percent shy of its initial plans.

Toyota shares, which were down 0.5% before the results announcement, extended losses immediately after and closed at 2,091 yen, down 3%, while the Nikkei 225 index was marginally higher.

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