TOKYO, (Reuters) – Toyota Motor posted a 17% increase in first-quarter profit on Thursday, as cost-cutting and a weaker yen helped offset lower sales and a decline in production at home.
The world’s top-selling automaker said operating profit for the three months through June totalled 1.3 trillion yen ($8.70 billion), matching the average of six analyst estimates compiled by LSEG.
But with that growth being the weakest in seven quarters, the results disappointed investors who had been betting the automaker would knock the lights out. Shares in Toyota, which declined more than 5% before earnings were released, extended losses and were down 8% at 2,712 yen as of 0529 GMT.
Toyota has been on a record profit run that has boosted its share price. But its outlook has been complicated by a tough market in China and the fall-out from a certification scandal.
“Despite the inability to maintain stable production in Japan due to factors such as certification issues and recalls, we achieved an increase in profit thanks to the support of all our stakeholders,” Toyota said in a statement.
Retail sales of Toyota and luxury Lexus brand cars declined 2% in the quarter, with the share of petrol-electric hybrids in sales reaching about two fifths.
Toyota, a pioneer in hybrid technology, has benefited as demand for EVs has slowed in markets such as the United States.
The automaker maintained its forecast of 4.3 trillion yen profit for the full year, versus a 5.3 trillion yen average of 18 analyst estimates.
Toyota has been grappling with a series of scandals at group firms over botched product certification test procedures that are undermining its reputation for safety and quality.
The transport ministry ordered it on Wednesday to take drastic steps to prevent a recurrence of misconduct after discovering new wrongdoing in certification procedures.
It is also struggling with inventory issues in the U.S.
“We still haven’t built up enough of an inventory yet in the United States, however compared to last year, there’s no doubt that it is recovering,” said Masahiro Yamamoto, chief officer of Toyota’s accounting group.
($1 = 149.4800 yen)
Reporting by Daniel Leussink; Editing by Christopher Cushing and David Dolan
