Toyota slides in first quarter, slashes full-year forecast

The Japanese manufacturer - the world’s largest producer of cars by value - slashed its full-year operating profit forecast to JPY 1.6trn from JPY 1.7trn.

If it meets that forecast, its profits will have fallen 44% in a year to their lowest level since 2013.

Toyota also revised its budgeted forex rates to JPY 102 against the greenback and 113 against the euro, from JPY 105 and JPY 120 respectively.

“The biggest change to our forecast is that we are now budgeting for the yen to trade around 100 to the U.S. dollar and the euro to trade around 110 from July,” said managing officer Tetsuya Otake.

A strong yen has the potential to hurt Toyota more than its rivals, as it produces around 40% of its cars in the country and exports almost half of them, much more than other Japanese carmakers.

For the quarter through June, operating profit was reported at JPY 642bn, with that strengthening yen pushing it down 15%.

That was still better than the consensus forecast for JPY 439.5bn as predicted by analysts surveyed by Reuters.

Sales during the first quarter rose in Japan, Europe and Asia but fell significantly in North America, where lower gas prices were taking attention away from its green Prius and towards thirstier SUVs and large cars.

It also lost a fortnight of production in April after a strong earthquake closed almost all of its assembly capacity, costing the company JPY 70bn at the time, though it hopes to make up the lost production by the end of March.