Toyota expects $4.3 bn hit from Iran war fallout amid supply disruptions

Toyota expects the fallout from the Iran war to cost it around $4.3 billion this financial year, the world’s largest automaker said on Friday, in one of the biggest warnings yet about the impact of the crisis on global companies.

 

Toyota reported an almost 50 per cent drop in quarterly earnings and said it expects full-year profit to decline by a fifth in the year that just started, as rising costs and supply disruptions linked to the war outweighed strong demand for hybrid vehicles.

 

The automaker expects hybrid vehicle sales to exceed 5 million units for the first time this year. The results underscore the uneven impact of the Middle East crisis, with higher fuel prices boosting demand for fuel-efficient cars, though not enough to offset mounting cost pressures.

   

Toyota posted an operating profit of 569.4 billion yen ($3.6 billion) for the three months ended March 31, compared with 1.1 trillion yen a year earlier. For the current fiscal year, it expects operating profit of 3 trillion yen.

 

That forecast was well below the 4.59 trillion yen median estimate in an LSEG poll of 23 analysts. Toyota shares fell after the earnings report and ended down about 2.2 per cent, marking their lowest close since mid-October.

 

The company said the total impact of the Middle East conflict would amount to around 670 billion yen ($4.3 billion) in the year ending March 2027. That estimate exceeds the figures provided so far by many major companies, including airlines.

 

The latest rise in energy prices adds to challenges for the global auto industry, which is already dealing with US tariffs and intensifying competition from Chinese automakers. Volkswagen CEO Oliver Blume said this week that tariffs represent a burden of 5 billion euros ($5.9 billion) annually on the German group’s operating profit.

 

Toyota said last week that its sales in the Middle East fell sharply in March after shipments to the region were disrupted.

 

The outlook is the first issued under new CEO Kenta Kon, who took over last month and now faces the challenge of steering the automaker through the impact of US President Donald Trump’s tariffs, which reduced operating profit in the year just ended by 1.4 trillion yen. 

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)