Japanese vehicle maker Toyota said on Wednesday that its annual net profit fell for the first time in five years with the company warning that there would be more declines due to a stronger yen.
Vehicle sales in the past fiscal year ticked up to 10.25 million units from 10.19 million vehicles a year earlier. In the year just ended, the company generated 1.99 trillion yen in operating profit.
Toyota, the world's second largest auto maker, sees operating profit at 1.6 trillion yen ($14.06-billion) in the year to March, below an average estimate of 2.3 trillion yen from 25 analysts polled by Thomson Reuters I/B/E/S, and less than the 1.99 trillion yen profit posted in the year just ended.
Still, this year Toyota will see a negative impact of around 165 billion yen in costs related to incentives, financial services and other marketing costs in the USA market.
Revenue increased 6.8 percent to 7.44 trillion yen ($66.87 billion).
Toyota's tepid global sales forecast comes as a run of strong USA demand for cars since the global financial crisis shows signs of petering out.
To improve profitability, the company aimed to build on the cost reduction efforts enacted past year, Toyoda said, adding it will also focus on selling larger vehicles.
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Crude oil prices in yen fell around 10% in fiscal 2016, while exports to Asia were strong. As of the end of December 2013, Toyota conducts its business worldwide with 52 overseas manufacturing companies in 27 countries and regions. The disheartening prediction underscores how the auto giant has relied heavily on a considerable slump in the yen over the recent years.
Executives at Toyota Motor say both their group sales and operating profit have fallen for the first time in 5 years.
To make ever-better cars, Toyota has introduced New Global Architecture which has manifested in the new Prius PHV and the C-HR new compact SUV. "But I now feel that, in terms of driving and design, our customers have begun to favourably evaluate our cars".
Global retail sales advanced 3.1 percent to 2.5 million vehicles in the January-March period, including results from its Daihatsu small-car subsidiary and truck-making affiliate Hino.
In the past year or so, strong USA demand for SUVs and other larger models has boosted sales of Nissan's Rogue crossover model, prompting the automaker to import vehicles from Japan and South Korea as local production struggled to keep up with demand.
A Toyota Land Cruiser is reflected on the emblem of Toyota Motor Corp.at Toyota showroom in Tokyo, Wednesday, May 10, 2017.