Toyota Sees Higher Material Costs Eating Into Profit

The Japanese car maker said its net profit in the January-March quarter, the final quarter of the previous fiscal year, fell 31% compared with a year earlier to the equivalent of $4.1 billion, although revenue was up 5.5%.

Like other auto makers, Toyota is grappling with a shortage of chips and higher costs of materials caused by supply-chain disruptions. It said Tuesday that some production lines in Japan would close for up to six days this month because of the lockdown in Shanghai, China.

“This fiscal year, it’s going to be even more difficult than in other years to make a forecast,” said Jun Nagata, Toyota’s chief communication officer.

Mr. Nagata said an end to the Covid-19 pandemic was a potential bright spot in the company’s outlook, but he added: “If you look at the negative factors, raw material prices are soaring, inflation is having an impact on the daily lives of people, [and] supply constraints of semiconductors will have an impact on the business of auto manufacturers. So the problems are compounding this year.”

For the current fiscal year, which ends in March 2023, Toyota said it expected group vehicle sales, including those of subsidiaries Daihatsu Motor Co. and Hino Motors Ltd., to increase to 10.7 million units from 10.4 million units last fiscal year.

It expects revenue to increase 5.2% to the equivalent of $253 billion. However, the additional costs and supply-chain disruptions mean profit is likely to fall 21% to the equivalent of about $17 billion, Toyota said.

Write to Kosaku Narioka at kosaku.narioka@wsj.com and Sean McLain at sean.mclain@wsj.com

The Japanese car maker said its net profit in the January-March quarter, the final quarter of the previous fiscal year, fell 31% compared with a year earlier to the equivalent of $4.1 billion, although revenue was up 5.5%.

Like other auto makers, Toyota is grappling with a shortage of chips and higher costs of materials caused by supply-chain disruptions. It said Tuesday that some production lines in Japan would close for up to six days this month because of the lockdown in Shanghai, China.

“This fiscal year, it’s going to be even more difficult than in other years to make a forecast,” said Jun Nagata, Toyota’s chief communication officer.

Mr. Nagata said an end to the Covid-19 pandemic was a potential bright spot in the company’s outlook, but he added: “If you look at the negative factors, raw material prices are soaring, inflation is having an impact on the daily lives of people, [and] supply constraints of semiconductors will have an impact on the business of auto manufacturers. So the problems are compounding this year.”

For the current fiscal year, which ends in March 2023, Toyota said it expected group vehicle sales, including those of subsidiaries Daihatsu Motor Co. and Hino Motors Ltd., to increase to 10.7 million units from 10.4 million units last fiscal year.

It expects revenue to increase 5.2% to the equivalent of $253 billion. However, the additional costs and supply-chain disruptions mean profit is likely to fall 21% to the equivalent of about $17 billion, Toyota said.

Write to Kosaku Narioka at kosaku.narioka@wsj.com and Sean McLain at sean.mclain@wsj.com