Toyota raises annual profit forecast 13%, unveils $6.4B buyback

Toyota on Tuesday lifted its full-year operating profit forecast by 13% and unveiled a share repurchase program worth up to 1 trillion yen ($6.4 billion), even as the world's largest automaker reported a fifth consecutive quarter of declining earnings weighed down by slumping sales in China and fallout from the Iran war.reuters+1

Stronger Yen Outlook Drives Revised Guidance

The company now expects operating profit of 3.4 trillion yen ($21.6 billion) for the fiscal year ending March 2027, up from its earlier projection of 3 trillion yen. Revenue guidance was also raised to 54 trillion yen from 51 trillion yen. Operating income for the April-June quarter fell 8.8% year-on-year to 1.06 trillion yen, missing the median analyst estimate of 1.11 trillion yen.investing+1

"In addition to revised foreign exchange assumptions, we steadily accumulated improvements in our marketing efforts, including increased sales supported by the establishment of alternative logistics routes to the Middle East," Toyota said in a statement. Net income attributable to the parent company jumped 75.6% to 1.48 trillion yen, largely driven by a one-off gain from the privatization of Toyota Industries ↗ 2.00%.reuters+1

Buyback and Shareholder Returns

Toyota said the buyback — representing as much as 4.22% of outstanding stock — reflects strong cash reserves and a push for improved capital efficiency. The company also plans to cancel 200 million shares. Despite the announcements, shares fell on Tuesday, closing down roughly 1.5%, underperforming the broader Nikkei 225.rte+3

The China Problem

The results come against a backdrop of intensifying competition from Chinese automakers. In a separate development reported by Drive, Toyota acknowledged it cannot compete on price with cheaper Chinese rivals and may pivot toward a more premium model strategy. Toyota's leadership has been vocal about the challenge posed by companies like BYD, with former CEO and current chief industry officer Koji Sato earlier describing the competitive threat as a "crisis" and urging Japanese automakers to collaborate on shared components to free up investment for software, batteries, and driver-assist technology.carsguide+2

Hybrid vehicle sales remain Toyota's strongest growth category and are forecast to push higher this fiscal year, with North America and Japan expected to be the primary drivers of volume.investing