Toyota Motor Corp has posted a 42 percent decline in quarterly operating profits as the Japanese automaker is squeezed by supply constraints and rising costs.
Operating profit for the three months ending June 30 sank to 578.66 billion yen ($4.3bn) from 997.4 billion yen ($7.45bn) in the same period a year earlier, Toyota said on Thursday, capping some difficult months for the brand.
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.
Like other auto manufacturers, Toyota is grappling with higher costs and fears that global inflation could put the brakes on consumer demand.
But Toyota’s current production woes mark a departure from its initial success in navigating supply chain problems in the early stages of the pandemic.
The carmaker cut its monthly production targets three times during the April-June quarter, falling 10 percent behind its initial goals, due to shortages of semiconductors and the impact of COVID-19 lockdowns in China.
Toyota shares, which were down 0.5 percent just before the release of the earnings, extended losses immediately after and were down 2.3 percent at 2,106 yen ($15.74) by 04:50 GMT.