Toyota projects lower profit due to Middle East impact

Toyota Motor reported higher quarterly net profit but said it expects the Middle East conflict to take a toll on its bottom line this fiscal year, Report informs referring to The Wall Street Journal.

The Japanese carmaker on Friday estimated a 670 billion yen drag, equivalent to $4.27 billion, on annual operating profit from the Iran war and its implications for operations. US tariffs are expected to weigh on operating profit by ¥1.38 trillion, it said, the same as the previous fiscal year ended March.

Takanori Azuma, Toyota's chief officer for accounting, said costs of fuel, transportation and paint have risen, and that it would take longer to deliver cars to buyers in the Middle East as a result of the conflict.

He said the company is working to lower the impact.

Toyota Motor remained the world's largest carmaker in 2025. Group sales rose 4.6% to a record 11.3 million vehicles, led by the US and Japan. This fiscal year, it sees sales slipping to 11.18 million units, dragged by the Middle East, despite projected gains in North America and Asia outside Japan.

The Japanese carmaker has been hit by the Trump administration's tariffs. Japanese autos are subject to a 15% tariff following a trade deal struck with Tokyo in July.

The yen's sharp depreciation in recent years has helped boost earnings for Japanese exporters, including Toyota, by making exports more competitive abroad and increasing the value of profits earned overseas in yen terms. The yen depreciated about 17% against the dollar over the past four years.

Shares of Toyota dropped 2.2% following the results, bringing year-to-date losses to 13%. Shares have been weighed by concerns about higher energy prices and weaker consumer sentiment amid the Middle East conflict.

The downbeat guidance came despite Toyota recording a 23% jump in net profit to Y817.2 billion for the three months ended March. That beat the ¥761.8 billion estimate in a poll of analysts by data provider Visible Alpha.

Fourth-quarter revenue increased 1.9% from a year earlier to ¥12.597 trillion.

For the year that began in April, it projected revenue to rise 0.6% to Y51.00 trillion and net profit to drop 22% to ¥3.000 trillion.