TOKYO – Microchip-challenged Toyota Motor Corp. again downgraded its global sales and production outlooks after operating profit tumbled 21 percent in the latest quarter with the semiconductor shortage and pandemic crimping output, stymying sales and denting earnings.
The world's biggest automaker cut its global consolidated sales forecast to 8.25 million vehicles for the current fiscal year ending March 31, from an earlier outlook of 8.55 million vehicles.
Toyota said it expects to lose between 100,000 and 200,000 units of output in March due to the semiconductor bottlenecks after losing 140,000 units in January from COVID-19 interruptions.
All told, Toyota said it could lose up to 480,000 vehicles of output from January through March.
“We don't think this imbalance between microchip demand and supply will improve anytime soon, and coupled with coronavirus outbreaks, the outlook still remains unclear,” a Toyota executive said after the automaker announced financial results on Wednesday.
“This uncertain situation will likely continue into the next fiscal year,” he said.
Toyota’s dialed down outlook encompasses a downward revision of its fiscal-year production plan to 8.5 million vehicles, from a target of 8.87 million envisioned as recently as mid-January.
“The plan for 8.5 million units is based on our taking into account all the supply shortages for parts that are currently expected and conservatively reducing the forecast,” Toyota said.
The impact from supply shortages and COVID-19 is felt not only at Toyota’s own plants but those of suppliers. The outlook for recovery remains unclear, and Toyota is reviewing production plans on a “daily basis,” the executive said. Soaring raw material prices are further weighing on results.
“The rate of increase in raw material prices is unprecedented, and we don’t think these high prices will come down in the next fiscal year,” he said. “We think this is a serious problem.”
In detailing financial results, Toyota still clung to its full fiscal year profit outlook, despite the slumping sales and production. It said beneficial foreign exchange rates would offset the blow.
Toyota expects operating profit of 2.8 trillion yen ($24.33 billion) and net income of 2.49 trillion yen ($21.63 billion). Both the operating profit and net income totals would represent the second highest earnings on record at the company, coming in just shy of the company’s all-time highs.
In the fiscal third quarter ended Dec. 31, operating profit fell 21 percent to 784.3 billion yen ($6.81 billion), but Toyota still delivered a double-digit operating profit margin of 10.1 percent.
Quarterly net income declined 5.6 percent to 791.7 billion yen ($6.88 billion).
Revenue retreated 4.5 percent to 7.786 trillion yen ($67.65 billion) in the October-December period, as global sales fell 15 percent to 2.0 million vehicles in the quarter. The consolidated sales figure covers deliveries for the Lexus and Toyota brands, as well as Daihatsu and Hino.
Global retail sales fell 11 percent to 2.52 million vehicles in the fiscal third quarter.
In the just-finished fiscal third quarter, North American sales fell 31 percent to 522,000 units. Regional operating profit plunged 45 percent to 108.8 billion yen ($945.3 million) in the period.
On the plus side, Toyota was able to cut North American incentive spending by 150 billion yen ($1.30 billion) in the first three quarters, as supply and inventory shriveled amid soaring demand.
Sales in Europe declined 12 percent to 250,000 vehicles, while the regional business there rebounded with operating profit growing 53 percent to 84.3 billion yen ($732.5 million).
Looking ahead, Toyota kept its retail sales forecast unchanged at 10.29 million vehicles for the fiscal year ending March 31, including Daihatsu and Hino volume.
That total would be up from 9.92 million units in the previous fiscal year and would fall just shy of the record 10.6 million vehicles sold in the fiscal year ended March 2019.
The company’s retail outlook for the Toyota and Lexus brands also stayed steady at 9.4 million, up from 9.09 million in the previous fiscal year.
Naoto Okamura contributed to this report