Toyota warns on profits after ‘unprecedented’ raw material costs
TOYOTA, the world’s largest carmaker, has warned that higher energy bills and raw material prices are set to hammer profits, despite increased car sales.
The company has predicted it will post operating profits of 2.4 trillion yen (£15bn) for the year through March, coming in lower than analyst estimates of 3.3 trillion yen.
It comes amid rising global energy prices and an “unprecedented” rise in costs for logistics and raw materials such as steel.
Toyota still predicts sales of 10.7m vehicles this year, up from 10.3m last year. Both are far higher than the 8.6m sold by rival Volkswagen last year.
However, higher sales and a weaker yen are unlikely to offset the extra costs of raw materials and logistics, which are expected to hit 1.45 trillion yen, according to executives. That is more than double last year’s all-time-high costs.
Masahiro Yamamoto, chief officer of Toyota’s accounting group, said: “We expect a decrease in our operating income due to unprecedented increases in materials and logistics costs. However, we will continue with our future investments.”
The automaker said it was “challenging” to raise prices despite the soaring costs and that it would make decisions based on demand in each region. Its shares slid 4pc in Tokyo.
Toyota also announced a slew of production downgrades as it struggles to buy the parts it needs, particularly computer chips. Carmakers across the globe are struggling to find a predictable and cheap supply of the computer chips modern cars need to control everything from windscreen wipers to automatic headlights. It comes amid supply chain issues and high demand from other customers such as phone makers.
Toyota has also faced other disruptive issues this year, including a supplier that was hit by a cyber attack in February which temporarily halted its car production in Japan. Some 13,000 fewer vehicles were made as 14 plants and 28 production lines were paused.
Yesterday, the automaker shaved 50,000 cars off its annual production target, as Chinese lockdowns hit factory output and held up shipments.
As a result, it said it would close 14 production lines at eight of its plants for six days, while apologising for “repeated adjustments to our production plans”.
China’s measures to contain coronavirus outbreaks have meant cities such as Shanghai have been placed under strict lockdown. This has forced factories that supply car parts and other components to close.