Toyota fourth-quarter profit misses by wide margin as U.S. tariffs drive 49% slump

Japan’s Toyota Motor on Friday reported a 49% drop in fourth-quarter operating profit, missing analysts’ estimates as U.S. tariffs and intensifying competition from Chinese automakers pressured earnings.

Here are Toyota’s results compared with median estimates from LSEG:

• Revenue: 12.6 trillion yen vs. 12.6 trillion yen expected
• Operating profit: 569.4 billion yen vs. 813.28 billion yen expected

The world’s largest automaker by sales volume saw a 1.89% year-on-year rise in revenue during the fourth quarter ended March, in line with expectations.

Operating profit declined for a fourth consecutive year-over-year period, reflecting persistent pressure from U.S. tariffs.

Net income attributable to the company was 817.2 billion yen from 664.6 billion yen a year ago.

Toyota’s consolidated vehicle sales in its financial fourth quarter fell to 2.29 million from 2.36 million units a year earlier.

Toyota lowered its operating income forecast by over 20% to 3 trillion yen for the financial year ending March 2027, while raising its sales revenue forecast by 0.6%.

“We have recently seen a significant rise in our breakeven volume due to a combination of increases in investments in human resources and future-oriented investments and the impact of U.S. tariffs,” the company said in an earnings statement.

The automaker said in a media briefing on Friday that it adopted a six-month average for its foreign exchange assumptions, rather than the usual monthly average, due to current volatility. Toyota set its average exchange rate assumption for the fiscal year at 150 yen to the U.S. dollar.

The weak yen has boosted the competitiveness of exporters such as Toyota by making its products cheaper for foreign buyers and increasing the value of overseas profits when converted back into the currency.

Toyota said its research and development expenses hit a record high partly due to certification-related issues and capacity constraints, though it expects its capital expenditure to stabilize going forward.

The company said it is also continuing to cut costs and reduce wasteful production, but expects higher expenses from the Middle East conflict and inflation.

The productivity of Toyota Motor’s assets declined over the full period 2016–2025, with a minor downtrend in asset turnover, according to a May 5 report by Price Target Research.

Toyota is facing challenges, weighed down by slowing sales in China’s auto market, vehicle recalls, intensifying competition in the electric vehicle space from peers, and Trump-related tariffs.

The company posted weaker U.S. quarterly sales in the first quarter amid concerns about affordability and fuel price pressures from the Middle East conflict. Toyota has also been trying to navigate production plans amid tariffs and other regulatory changes.

The company said in March that it would spend $1 billion total at two U.S. plants as part of a plan to invest up to $10 billion there over the next five years.

Toyota expects to see growth in the battery-electric vehicle space in China, Europe and North America, and plans to expand its business in those regions.

Toyota shares last traded 2.18% lower in Tokyo on Friday.