Toyota is expected to record its first year-on-year increase in operating income in six quarters when it reports results for July to September on Thursday. Analysts cited by LSEG forecast operating profit will climb 18% to 992 billion yen ($6.3 billion), while revenue is expected to rise 8% to 13.4 trillion yen.
A weaker yen and strong demand for more profitable hybrid vehicles are forecast to help offset a sharp decline in sales in China and the Middle East. Toyota will also benefit from the absence of U.S. tariff-related costs that weighed on earnings a year earlier.
Global sales of Toyota and Lexus vehicles fell 4% to just over 2.5 million during the quarter. Sales dropped 22% in China and by about a third in the Middle East. In North America, sales of higher-margin electrified vehicles rose more than 30% to almost 430,000, while overall U.S. sales increased by less than 1%.
Analyst Yuya Takahashi of Marusan Securities said rising gasoline prices were supporting demand for fuel-efficient hybrids, adding that the number of higher-profit models sold would be important to watch.
Toyota’s position in China remains a concern for investors as competition from local brands intensifies alongside a rapid shift toward electric vehicles. The pressure has also affected suppliers: Denso reported that its operating profit in Asia fell by more than a third in the six months through September, citing weaker vehicle sales in China and higher material costs.
Investors are also expected to assess Toyota’s expanding spending on factory automation, vehicle software and autonomous driving. The company has estimated that modernising its factories through automation and robotics could cost 1 trillion yen a year from 2028.
Sources: Investing.com News.