By Daniel Leussink
TOKYO (Reuters) -Toyota raised its full-year profit forecast on Wednesday, with the Japanese automaker betting that cost-cutting and strong demand for hybrids would help it ride out the impact
of U.S. President Donald Trump's tariffs.
The world's top-selling carmaker now expects operating profit of 3.4 trillion yen ($22.6 billion) for the financial year to end-March, up 6% from the 3.2 trillion yen it previously forecast.
The U.S. tariffs have dealt a body blow to an industry already stung by deepening competition from Chinese EV makers and a once-in-a-century upheaval brought by the advance of EVs and other new technologies. Toyota estimated the tariffs would cost it 1.45 trillion yen in the current financial year.
"North America is facing a very tough situation due to the impact of tariffs," Kenta Kon, Toyota's chief financial officer, told a financial results briefing. While conditions "were not easy" in other markets such as China, Europe, Asia and Africa, both profitability and sales volume remained "solid", he said.
Toyota reported a second straight quarterly operating profit drop in the second quarter at 839.6 billion yen, down 27% from 1.16 trillion yen a year earlier and below the 863.1 billion yen average estimate of eight analysts surveyed by LSEG.
Despite increased vehicle sales, the automaker's North American business swung to an operating loss of 134 billion yen for the first half of the financial year from a 128 billion yen profit a year earlier, hurt by U.S. tariffs.
Toyota said last week its worldwide production increased by more than 10% in September and rose for a fourth straight month, as both sales and output increased in the U.S., its top market.
Toyota shares were deep in negative territory on Wednesday afternoon, trading 3.5% lower compared with a decline of 1.8% shortly before the release of its results.
($1 = 150.7800 yen)
(Reporting by Daniel Leussink; Editing by Jacqueline Wong and David Dolan)
