Toyota revised its earnings forecast Tuesday, saying it expects to see a record annual net profit thanks to robust global sales and a weaker yen.
Japan’s top carmaker expects to bank a net profit of ¥2.4 trillion ($22 billion) for the business year to March, up from its November estimate of ¥1.95 trillion.
Annual sales are now forecast at ¥29 trillion, up from an earlier projection of ¥28.5 trillion, Toyota Motor Corp. said.
Last May the company announced its first drop in annual profit for five years, which it blamed on the cost of customer incentives in the key U.S. market. Toyota said net profit rose 40.5 percent to ¥2.0 trillion for the nine months to December, on sales of ¥21.8 trillion, which rose 8.1 percent.
“So far, foreign exchange has been a positive factor for the Japanese auto industry, but it’s hard to predict if the impact will continue as the yen has recently become strong,” said Satoru Takada, an analyst at TIW, a Tokyo-based research and consulting firm.
“Foreign exchange will remain a decisive factor for the industry,” Takada said before the announcement.
On Tuesday, the yen advanced against major currencies on rising demand for the safe-haven currency as global markets were routed, following a stellar 2017, on worries about further hikes in U.S. interest rates this year.
Toyota said global sales for the nine month period edged up slightly from a year earlier, to 7.85 million units. Operating profit from its domestic and European markets showed moderate gains for the nine months.
But operating profit from North America more than halved because of a decline in sales as well as bigger incentives.
“Sales incentives are pressuring its operating profit in North America, where Toyota is still struggling to catch up with growing demand for SUV and pickup trucks,” Takada said.
Japan’s auto industry is facing uncertainty over President Donald Trump’s drive to support U.S. firms against foreign imports, fanning fears of a global trade war.
But smaller rival Honda Motor co. Friday nearly doubled its annual net-profit forecast to ¥1 trillion, citing strong growth in the sales of its cars and motorcycles, as well as U.S. corporate tax cuts. For the nine months to December, Honda’s net profit jumped 82.8 percent from a year earlier to ¥951.6 billion.
Nissan is scheduled to report its nine-month results Thursday.
Nissan has downgraded its annual operating profit forecast after a damaging inspection scandal in its domestic market.