Toyota Motor Corp. said Wednesday that its net profit declined for the first time in five years in the business year that ended in March, a downward trend it expects to continue in the near future amid a stronger yen and global political uncertainty.
The Aichi Prefecture-based auto giant, which lost its crown as the world’s top-selling automaker to Volkswagen AG last year, has forecast a ¥1.5 trillion net profit for the business year to March 2018, an 18.1 percent drop from a year earlier. It also said its operating profit is expected to fall 19.8 percent to ¥1.6 trillion.
The forecast followed the company’s announcement that it posted ¥1.83 trillion net profit for fiscal 2016 that ended in March, or a 20.8 percent drop from the previous year. The last time Toyota recorded a decline in its net profit was in fiscal 2011.
Toyota also said its operating profit for the last business year was ¥1.99 trillion, a 30.1 percent drop year-on-year. Sales also declined 2.8 percent to ¥27.6 trillion.
The company said the declines in its earnings are due mostly to a stronger yen and cost increases.
Despite declines in earnings, the company said unit sales remain firm as worldwide consolidated sales increased 3.3 percent year-on-year to reach 8.97 million vehicles in fiscal 2016, although the sales in North America declined slightly. Sales also declined in the Middle East, Central and South America, Oceania and Africa.
The nation’s major auto companies, which rely heavily on exports, were beneficiaries of a weaker yen in recent years.
“It is my view that our latest financial results demonstrate Toyota’s desire to steadily and continuously advance our investment in the future, rather than place top priority on short-term profits,” President Akio Toyoda said at a news conference following the release of the earnings report.
Meanwhile, when asked how Toyota would deal with uncertainty caused by emerging protectionism in Western countries, Executive Vice President Osamu Nagata said the company would “work to deepen understanding” of its contributions to local communities and its vision for the future.
In January, U.S. president Donald Trump — through his Twitter account — singled out Toyota, urging the company to build plants in the U.S. instead of Mexico or face a “big border tax” on its imports.
Following the threat, Toyota announced it would invest $10 billion in the U.S. over the next five years, although the company reportedly denied the move was in response to Trump’s remarks.
Under the new plan, the company in April announced it would invest $1.33 billion to upgrade its factory in Georgetown, Kentucky, in a bid to boost production of its Camry sedan, long the top-selling car in the U.S.
While it plans to keep investing in the U.S., Toyota said it would continue building a new factory in Mexico unless there is “a massive change” in circumstances, Nagata said.
“Once we decided (to build a factory in Mexico), I think we incur responsibility to (contribute to) the local community and employment there,” he said.
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