Toyota braces for fourth quarter of shrunken profits amid global headwinds

Japanese automotive giant Toyota is expected to report a fourth consecutive year-on-year decline in quarterly operating profit next week, as rising costs and external pressures—including U.S. tariffs and more expensive raw materials—continue to weigh on performance.

Operating profit for the January–March period is projected to come in at around $5.17 billion, which marks a drop of about 27% compared with the same period last year, according to analyst estimates cited by Reuters.

If confirmed, Toyota’s annual operating profit would fall to its lowest level in three years.

The downturn is being driven primarily by higher costs for materials and components, increased labour expenses across supply chains, and the impact of US tariffs on car imports. Additional pressure has come from rising commodity prices linked to tensions in the Middle East, which have affected supplies of aluminium, oil, and other key inputs.

Analysts note that the Iran conflict has also disrupted vehicle shipments to the region. While the Middle East represents a relatively small market for Toyota in terms of size, with only about 34,000 vehicles sold per month, it tends to have a higher share of expensive models.

In March, Toyota’s sales in the Middle East fell by nearly one-third, marking the second consecutive month of declining global sales. Since late February, the company’s shares have dropped by more than 20%.

Experts also warn that higher aluminium prices typically feed into automakers’ production costs with a delay of several months, meaning additional pressure on profits could build over the current financial year.

The article points out that investor attention will also be focused on the first earnings report under Toyota’s new CEO, Kenta Kon, who took the helm last month.

News of Toyota's poor performance echo a wider trend seen in the automotive industry at the moment, with market leaders such as Germany's Volkswagen and American General Motors' reporting similar losses, as they are burdened by the same challenges as their Japanese competitor.

By Nazrin Sadigova