Japan’s Toyota Motor Corp posted a surprise 22% rise in third-quarter operating profit on Thursday, as a weaker yen and higher sales volumes helped the world’s top automaker overcome a jolt from the soaring costs of raw materials.
Global car makers have been squeezed by both the semiconductor shortage and rising costs, adding to the complexity for companies trying to navigate the difficult shift to electric vehicles and fierce competition from newcomers.
Toyota said it was working to secure a stable supply of chips, according to a presentation that accompanied the results. Despite the headwinds, vehicle sales rose across all major regions, with North America, its biggest market, showing the strongest growth of 16%, double the overall average gain.
“Vehicle sales are very strong, but costs are rising,” said Koji Endo, senior analyst at SBI Securities. “Toyota has been gradually raising prices in the United States from around the second half of last year to offset that.”
Operating profit for the three months ended Dec. 31 was 956.7 billion yen ($7.28 billion). That beat the average 764.54 billion yen profit estimated by 10 analysts, according to Refinitiv data. In the same period a year earlier, Toyota reported a 784.4 billion yen profit.
While it trimmed its annual production target by about 1%, to around 9.1 million vehicles, it stuck to its forecast for annual profit of 2.4 trillion yen for the year to end-March.
The automaker is likely to comfortably exceed its full-year forecast, given that it has now delivered 2.1 trillion yen in the first nine months of the year, Endo said.
Toyota gained from a plunge in the yen in October last year. The Japanese currency hit a 32-year low of 151.94 to the dollar on Oct. 21, prompting authorities to intervene.
Although Japanese companies increasingly produce abroad, meaning the weak yen is less of a boon than it used to be, a weaker currency still adds to the bottom line when profits from abroad are brought home.
Toyota rival Nissan also benefitted from the yen in its third-quarter results, with its profits more than doubling.
As the prolonged global shortage of auto chips enters its third year, some car makers are suffering more than others.
Ford Motor Co (F.N) last week blamed a 100,000 vehicle shortfall in its fourth-quarter volume mostly on the inability to obtain enough chips.
Tesla Inc (TSLA.O), which has been recognised for handling the chip shortage better than most automakers, said last October it was able to address some chip issues by rewriting its software to use different or fewer chips.
Toyota said last month its chief executive, Akio Toyoda, would step down in April as head of the company his grandfather founded. He will hand over to the leader of Toyota’s Lexus luxury brand as the shift to electric vehicles challenges the car giant.
Toyota had previously expected to manufacture 9.7 million cars this fiscal year but lowered the target to 9.2 million in November and by another 100,000 cars on Thursday.
It also cut its sales target for battery electric vehicles to 40 from 58, following an embarrassing recall of its first battery electric model, the bz4x, last year due to safety issues.
Toyota shares, which were down 0.4% just before the release of the earnings, reversed losses immediately after and finished slightly in positive territory, up 0.2% on the day.
