Toyota Projects Lower Profit Due to Middle East Impact

By Kosaku Narioka

Toyota Motor reported higher quarterly net profit but said it expects the Middle East conflict to take a toll on its bottom line this fiscal year.

The Japanese carmaker on Friday estimated a 670 billion yen drag, equivalent to $4.27 billion, on annual operating profit from the Iran war. U.S. tariffs are expected to weigh on operating profit by Y1.38 trillion, it said, the same as the previous fiscal year.

The downbeat guidance came despite Toyota recording a 23% jump in net profit to Y817.2 billion for the three months ended March. That beat the Y761.8 billion estimate in a poll of analysts by data provider Visible Alpha.

Fourth-quarter revenue increased 1.9% from a year earlier to Y12.597 trillion.

For the year that began in April, it projected revenue to rise 0.6% to Y51.00 trillion and net profit to drop 22% to Y3.000 trillion.

Toyota Motor remained the world's largest carmaker in 2025. Group sales rose 4.6% to a record 11.3 million vehicles, led by the U.S. and Japan. This fiscal year, it sees sales slipping to 11.18 million units, dragged by the Middle East, despite projected gains in North America and Asia outside Japan.

The Japanese carmaker has been hit by the Trump administration's tariffs. Japanese autos are subject to a 15% tariff following a trade deal struck with Tokyo in July.

The yen's sharp depreciation in recent years has helped boost earnings for Japanese exporters, including Toyota, by making exports more competitive abroad and increasing the value of profits earned overseas in yen terms. The yen depreciated about 17% against the dollar over the past four years.

Shares of Toyota have fallen 11% this year through Thursday, weighed by concerns about higher energy prices and weaker consumer sentiment amid the Middle East conflict.

Write to Kosaku Narioka at kosaku.narioka@wsj.com

(END) Dow Jones Newswires

May 08, 2026 02:47 ET (06:47 GMT)