High material costs and supply chain problems are now also reflected in the balance sheet of the world’s largest car manufacturer.
(Photo: dpa)
Tokyo The world’s largest carmaker Toyota has disappointed shareholders with a slump in profits. As soon as the Japanese group published its balance sheet for the first quarter of the financial year that has been running since April on Thursday, investors drove the share price down by just over three percent.
The trigger: Thanks to the slide in the yen, Toyota was able to increase sales by seven percent compared to the previous year to 8.5 trillion yen (62.4 billion euros). But sales fell by eight percent to 2.5 million vehicles, and operating profit fell by 42 percent to 578.6 billion yen (4.3 billion euros). The profit margin fell from 12.6 percent in the previous year to 6.8 percent.
As a result, the high material costs and supply chain problems that plague automakers worldwide are now reflected in Toyota’s balance sheet. Volkswagen in particular was hit hard with sales slumping by more than 20 percent. In addition to the chip bottlenecks, Toyota blamed the corona lockdown in the Chinese metropolis of Shanghai and floods in South Africa for the decline in sales.
The group explained that demand would continue to exceed production and that customers around the world would have to wait for their vehicles to be delivered. “Electrified vehicles in particular are more likely to be affected by semiconductor shortages because they require many chips,” it said in a statement. “As a result, delivery times for electrified vehicles are longer.”
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Rising raw material and material costs also reduced profits by 2.3 billion euros. In addition, Toyota also recorded valuation losses from currency hedges in the amount of 740 million euros – mainly due to the rapid rise in interest rates in the USA.
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With its annual forecast, Toyota nevertheless underscores its current special position in the automotive industry. Despite the headwind, the group largely stuck to its forecast. Sales are expected to increase slightly more than previously expected to 34.5 trillion yen (254 billion euros) in the current year. Toyota plans to keep operating profit stable at 2.4 trillion yen, down 20 percent from 2021.
At the same time, Toyota confirmed its sales forecast of 10.7 million vehicles. This would not only make the Japanese the only carmaker to break through the ten million vehicle sales mark this year. Despite the supply chain problems, Toyota would even sell three percent more cars than in 2021.
Toyota blames the close cooperation with its suppliers for the high production, which is now to be improved. “In the past fiscal year, the high-volume production schedule and repeated production cuts announced at the last minute have put a heavy strain on our suppliers,” Toyota said.
After discussions with the suppliers, Toyota is no longer announcing its production plans, including possible cuts, for the coming month, but for three months in advance. This allows partners to secure staff and parts in advance. In addition, despite unforeseeable bottlenecks in semiconductors, the group wants to work with suppliers to exceed their own sales forecast.
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