Toyota Motor Corp. expects its profits to shrink in the coming fiscal year due to rising material costs and other operating challenges facing carmakers, including the continuing fallout from the COVID-19 pandemic, global political instability created by the war in Ukraine and shortages of semiconductors.
Shortages dog manufacturers
Chip shortages closed plants in North America operated by Ford Motor Co. and Stellantis again this week. Meanwhile Rivian CEO R.J. Scaringe said during a call with analysts after the company reported a $1.6 billion loss for the first quarter, the company’s ramp up of production was slower than expected due to shortages of critical semiconductors.
The nascent EV maker produces 2,553 vehicles in Q1, delivering 1,227 units, generating $95 million in revenue. Officials noted as of May 9, the company’s built about 5,000 vehicles since production started last year.
Scaringe said Rivian is working closely with suppliers to insure it has the components it needs to reach its goal of building 25,000 vehicles this year. The vow helped stabilize the value of Rivian stock, which sunk to a new low on news of Ford’s decision to sell a block of 8 million Rivian shares.
Toyota downgrades outlook
Toyota said this week operating profit for the fiscal year ending March 31 rose 36.3% to $23 billion in the last fiscal year, the highest on record for a Japanese company, boosted by a sales recovery from the pandemic and a favorable exchange rate against the U.S. dollar.
Toyota’s net profit also increased 26.9% from the previous year, as the positive factors offset the negative impact of production disruptions caused by a global chip crunch and supply chain constraints.
Sales climbed 15.3%, due to brisk business in the United States and Asia.
However, Toyota’s profit declined 31% in the January-March quarter from the year before, dropping to $4.1 billion despite the 6% increase in sales revenue.
The guidance from Toyota executives for the new fiscal year calls for a 20% drop in operating profit to approximately $17 billion. Rising materials costs are expected to reduce profits, according to Toyota executives.
