Japan — Toyota Raises Annual Profit Forecast by 15% as Hybrid Demand Drives Earnings Recovery
Toyota Motor reported a substantial improvement in quarterly earnings on Thursday, November 5, as strong demand for hybrid vehicles helped the Japanese automaker offset weaker sales across several international markets.
The world’s largest carmaker posted operating profit of 1.13 trillion yen for the July-September quarter, a 34% increase from the corresponding period a year earlier. The figure also surpassed the median analyst estimate of 992 billion yen in a poll conducted by LSEG.
Following the stronger results, Toyota upgraded its operating-profit outlook for the financial year ending March 2027.
The company now anticipates annual operating profit of 3.9 trillion yen ($24.6 billion), marking a 15% increase from its previous forecast.
Toyota’s sustained investment in petrol-electric hybrid technology played a significant role in its improved financial performance.
While several established automakers directed considerable resources toward fully electric vehicles, Toyota maintained its focus on developing hybrid systems that combine conventional engines with electric motors.
That approach has helped the company remain competitive as demand for fully electric vehicles has softened in certain markets.
Rising fuel prices have also encouraged consumers to consider more fuel-efficient vehicles, providing additional support for Toyota’s hybrid business.
The automaker benefited further from a weaker Japanese yen and reduced US tariffs, which helped counter declining sales in China and the Middle East.
Toyota’s results come amid growing competitive pressure on traditional car manufacturers. Chinese electric-vehicle producers are continuing their international expansion, forcing established automotive companies to strengthen their technology, pricing strategies and manufacturing efficiency.
The Japanese automaker is also showing signs of recovering its position in the Chinese market.
Chief Financial Officer Yoichi Miyazaki said Toyota had brought its market-share decline to a halt and was beginning to regain lost ground.
“We’ve been able to halt the decline in our market share and are now starting to regain some ground,” he said.
Alongside its earnings announcement, Toyota revealed a substantial programme to increase returns to shareholders.
The company intends to distribute up to 14 trillion yen ($89 billion) to shareholders by March 2031, twice the approximately 7 trillion yen returned over the previous five years.
Toyota also expanded its planned share buyback programme to 1.3 trillion yen, compared with its earlier target of as much as 1 trillion yen.
The automaker currently holds approximately 9.5 trillion yen in cash and liquid assets. Its plans come as corporate governance reforms in Japan have increased pressure on businesses to make more efficient use of their capital.
Toyota also intends to establish a robotics business supplying robots to manufacturers and other industries. The initiative is expected to become another important source of future growth.
The company plans to commit at least 22 trillion yen to research and development and capital expenditure through fiscal 2030.
Additionally, Toyota aims to bring its net liquid assets down to 7 trillion yen by March 2031, reducing the figure by more than half from its end-March level.
The latest financial results indicate that Toyota’s continued emphasis on hybrid technology is providing a competitive advantage as the company invests in additional technologies and prepares for further changes in the automotive sector.
Toyota shares closed 17% higher on Thursday, recording their largest single-day increase in almost 40 years.
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