Toyota Motor Corp. said Thursday its net profit in the nine months through December fell 18.0 percent to 1.90 trillion yen ($14.5 billion) from a year earlier as rising material costs eroded its profit margin despite hitting record high sales.
During the nine-month period, sales rose 18.0 percent to 27.46 trillion yen, a record high, supported by an increase in vehicle sales in North America and Asia alongside a weaker yen, the Japanese automaker said.
Operating profits slid 17.1 percent to 2.10 trillion yen due to higher prices for commodities such as steel, aluminum and oil, according to the company.
Rises in other expenditures and losses also weighed on profitability while the yen's sharp depreciation, hitting a 32-year-low against the U.S. dollar in October, boosted operating profits elsewhere and helped cushion the blow, it said.
The company now expects the yen to trade at 134 yen against the U.S. dollar for the current business year through March, compared with its earlier estimate of 135 yen.
Every 1-yen fall against the dollar boosts the automaker's operating profits by 45 billion yen, Toyota said.
By region, its North American business was hit particularly hard by rising costs, posting operating losses in the three months through December, though profits in Japan and Asia rose during the quarter.
The positive impact of price hikes in North America has not made up for rising material prices, the company said.
Toyota lowered its worldwide vehicle production outlook to 9.1 million units from an earlier projection of 9.2 million for the year to March due to difficulties around procuring enough semiconductors.
The automaker kept its annual earnings forecast and group worldwide vehicle sales target unchanged.
For the year ending March, it expects to post a net profit of 2.36 trillion yen, down 17.2 percent from a year before. Sales are expected to rise 14.7 percent to 36 trillion yen.
Together with its subsidiaries Daihatsu Motor Co. and Hino Motors Ltd., the automaker group plans to sell 10.4 million units for the business year.