Toyota expected to post fifth straight profit drop amid quake disruption

Toyota is forecast to report a fifth consecutive quarterly operating profit decline when it releases April-June results on Tuesday, as weaker vehicle sales, rising supply chain costs, and disruption from a recent earthquake in southern Japan weigh on the world's largest automaker.

Analysts surveyed by LSEG project operating profit of 1.11 trillion yen ($7.04 billion) for the quarter, down 5% from a year earlier, according to a Reuters report published Monday.cnbc+1

Sales Weakness and Rising Costs

Global sales of Toyota and Lexus vehicles fell 3% to just over 2.5 million units in the April-June quarter, with a 28% decline in China and a one-third drop in the Middle East outweighing modest growth in the United States. The Middle East conflict, which began in late February, has pushed up prices for materials including aluminium and naphtha while disrupting vehicle shipments to the region.investing+1

"The first quarter could be a bit tougher than expected," said Christopher Richter, autos analyst at CLSA, noting that sales volumes appeared weaker than anticipated. Richter added that Toyota had posted weak sales in Oceania, down 16%, and Latin America, down 5%, where BYD and other Chinese brands are expanding aggressively.auto.economictimes.indiatimes+1

Toyota has also faced pressure on U.S. sales from the transition of its outgoing RAV4 sport utility vehicle to a redesigned version of one of its best-selling models globally.investing

Earthquake Fallout Clouds Outlook

Investors will be watching closely for details on the fallout from a deadly earthquake that struck Japan's Kyushu island last week, disrupting production at suppliers and forcing Toyota to halt output at four domestic plants. Toyota has suspended production at three plants in the region through Wednesday and halted output at another plant in central Japan through Friday, with two of the four being vehicle assembly sites.cnbc+1

The uncertainty was underscored on Friday when supplier Aisin said it could not say when output at a damaged plant near the quake's epicenter would resume, with about 200 people working on recovery efforts at the site.investing

Broader Struggles in China

Separately, Toyota reported its first-ever simultaneous decline in global production and sales for the first half of 2026. From January to June, the company produced 4.86 million vehicles, down 1.2% year-on-year, and sold 5.01 million units, a decline of 2.9%. Sales in China totaled 694,700 units in the first half, down 17.1%, as the penetration rate of new energy vehicles in China rose from 39% in January to 63% in June.news.futunn

Analysts will be looking for any change to Toyota's 3 trillion yen operating profit forecast for the current financial year, particularly as higher material costs and earthquake-related disruptions cloud the outlook.auto.economictimes.indiatimes+1