TOKYO -- Toyota Motor Corp. reported Thursday a 14.5 percent drop in profit for the fiscal first quarter as sales fell and a strong yen cut into earnings for the Japanese automaker.
Two powerful quakes in southwestern Kumamoto in April that had disrupted production also hurt results.
Toyota's April-June profit totaled $5.4 billion, down from $6.4 billion the same period a year earlier. The results were better than the $4.3 billion profit that analysts surveyed by FactSet had projected.
Quarterly sales slipped nearly 6 percent to $64.9 billion.
Toyota also lowered its profit forecast for the fiscal year through March 2017, to $14 billion, down from an earlier forecast for a $14.8 billion profit.
Toyota, which makes the Prius hybrid, Corolla subcompact and Lexus luxury line, had a $22 billion profit for the fiscal year through March.
Managing Officer Tetsuya Otake said cost cuts did not fully offset the negative impact of the yen's appreciation, which erased $2.3 billion from Toyota's operating profit.
A strong yen erodes the overseas revenue of Japanese exporters such as Toyota when translated into yen. The dollar, which was trading at 101.5 yen Thursday, has plummeted in recent months from about 120 yen a year earlier.
Cost cuts did add $887 million to operating income.
"They are trying to cut costs, variable costs, overhead cost but there's not enough to offset the loss from the yen," said Steve Man, a Hong Kong-based autos analyst at Bloomberg Intelligence. "They are the most aggressive in terms of cutting the forecast. They are trying to cut as much as possible to set a lower expectation."
Toyota sold 2.17 million vehicles around the world for the quarter. Vehicle sales were up in Japan, the rest of Asia and Europe, but fell in North America.
The recent drop in oil prices tends to work as a minus for Toyota, whose reputation is based on offering gas-sipping compacts and gas-electric hybrids.
Toyota expects to sell 10.15 million vehicles for the fiscal year through March 2017, up from 10.09 million the year before.
Volkswagen AG, despite being tarnished by an emissions-cheating scandal, could overtake Toyota as the world's biggest automaker in global vehicle sales this year, as the German automaker has been closing in on Toyota.
Toyota overtook U.S. automaker General Motors Co. as the No. 1 automaker in 2008, although it relinquished that status for a year in 2011, when Japan was hit by the triple tsunami, quake and nuclear disasters.
The introduction of a redesigned Prius hybrid late last year highlights the challenge Toyota faces in responding to the whims of consumers across its biggest markets. In Japan, buyers have responded to the improved mileage and higher-tech interior by making Prius the top-selling model each month this year.
The reception in the U.S. is another story. Sales of the Prius sedan model have dropped 11 percent this year through July, and deliveries have plunged 26 percent for the broader line. Toyota said Wednesday it would postpone the start of sales for its Prius plug-in model to the winter, rather than begin Japan deliveries this autumn.
Information for this article was contributed by Craig Trudell and Yuki Hagiwara of Bloomberg News.
Business on 08/05/2016