Toyota’s full-year net profit drops 14% on rising costs

Toyota aims to sell 11.38 million cars globally this year as it ramps up EV push.

Toyota Motor Corp saw its attributable net profit tumble 14% to ¥2.45t for the financial year ended March despite robust car sales after soaring material costs eroded margins, the company announced Wednesday.

The world’s biggest car manufacturer has sold 10.56 million vehicles globally in the 12 months ended March, beating its 10.38 million sales a year ago by 1.7%. This pushed Toyota’s total sales revenues higher by 18% to ¥37.15b according to its latest financial results.

Despite strong sales, a challenging business environment and rising material costs dragged its operating income down by 8.7% to ¥2.73t, causing its operating margin to shrink to 7.3% from 9.5% the year prior.

“Despite the difficulties, there’s still room for much improvement,” Toyota president and chief executive officer Koji Sato said in a press briefing that day.

For this financial year ending March 2024, the company expects its attributable net income to rise by 5.3 percent and reach ¥2.58t as global sales are targeted to hit 11.38 million on stronger electric vehicle sales.

Toyota also set a ¥38t revenue target this financial year which would translate to a 2.3% annual revenue growth for the Japanese automaker.

“We are seeing improvements in the supply constraints. We will improve the appeal and attractiveness of our products to generate higher profitability and by doing so, we can boost our resistance against foreign exchange fluctuations and soaring materials,” Sato said.

The company is also allocating ¥3t for capital expenditures this year, including research and development spending, to support growth.