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Toyota breaks profit records as it pulls on pandemic, lack of semiconductors

Worldwide retail sales rose 4.7 percent to 10.38 million vehicles in the 12-month period.

In the just-concluded financial year, Toyota expanded its profits despite rising costs for raw materials and logistics, as well as increased costs for labor, R&D and depreciation. A tailwind from favorable exchange rates and lower marketing costs helped offset the cost increase.

The regional operating profit increased in virtually all major markets worldwide.

Bearish views

Looking to the future, however, Toyota was not so confident.

The ever-conservative automaker predicts that operating profit and net income will fall back in the current fiscal year ending March 31, 2023, even though it sees record sales.

Toyota expects raw material costs to more than double from the total hit last year. And the outlook is further clouded by uncertainty about inflation in markets such as the US, persistent problems with the semiconductor supply chain, pandemic lockdowns in China and the ongoing war in Ukraine.

“These factors will be amplified,” said Chief Communications Officer Jun Nagata. “This fiscal year will be even harder than other years to make a forecast.”

Toyota will do its best to protect suppliers from rising commodity prices by absorbing the extra costs, CFO Kenta Kon said. The company will also be considerate in passing on costs to customers through higher label prices, executives said. While there are some vehicles and regions that can accommodate price increases, other markets and models will not.

The leaders declined to give more details. But Nagata said Toyota’s strength is being a complete player that can offer everything from economically compact to luxury SUVs. The company has and offers in almost everyone’s price range, even in an era of inflation, he said.

Keeping the line like this is expected to dampen profits.

Toyota expects operating profit to fall to 2.40 trillion yen ($ 19.69 billion) in the current fiscal year as net income falls back to 2.26 billion yen ($ 18.54 billion).

But at the same time, Toyota also expects global retail sales to grow by 3.1 percent to $ 10.7 million. If achieved, it would post yet another record for the automaker.

Toyota achieved a 6.2 percent increase in global production to 10.06 million units in the just-concluded financial year, as it increased factories to cover lost production from the previous two financial years.

Global production fell 2.2 percent in the fiscal year ending March 31, 2020, when the pandemic hit. And it fell 8.9 percent the following fiscal year as the chip shortage intensified the pain.

In March, Toyota posted record production for the month of 1.01 million vehicles.

For the period January-March, however, worldwide production fell 0.5 percent as operations were hit by a number of factors, including pandemic-related supply disruptions, a cyber attack on a supplier, persistent semiconductor shortages and an earthquake that disrupted the power supply.

Toyota has said it will not rush into its race to regain lost production, slowing the recovery pace from April to June as part of a “deliberate break” to achieve a more “reasonable” production pace, as the chip shortage and pandemic continues. shrink industry.

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