TOKYO, Aug. 4 (Xinhua) -- Toyota Motor Corp. on Thursday revised downwards its full-year earnings outlook following the automaker's group net profit for the April-Thursday quarter decelerating 14.5 percent owing to the yen's appreciation and earthquake-linked supply chain issues here.
Japan's top automaker said that its net profit came in at 552.47 billion yen (5.46 billion U.S. dollars) in the reporting period, with its operating profit dropping 15 percent to 642.23 billion yen, on declining sales totaling 6.59 trillion yen, down 5.7 percent.
The maker of the ubiquitous Prius Hybrid said the downward revision was made owing to cheaper gasoline prices in major overseas markets, which has seen a resurgence in purchases of bigger cars and SUVs, particularly in North America, as well as the yen's strength and domestic supply chain issues stemming from earthquakes striking southwest Japan in April this year.
The Aichi-based manufacturer also said its global sales target was now 1.45 trillion yen (14.3 billion U.S. dollars) for the financial year ending March 2017, a drop from previous forecasts of 1.5 trillion yen.
Toyota, in a bid to capture more market share for larger vehicles with increased production of its popular Highlander and Rav-4 SUV models, said its operating profit is expected to drop 43.9 percent to 1.6 trillion yen, instead of a previously expected 1.7 trillion yen, with sales likely retreating 8.5 percent to 26 trillion yen, less than previous estimates of 26.5 trillion yen.
A stronger-than-expected yen has largely influenced Toyota's downwards revisions, as the yen's strength diminishes the automakers'overseas profits when they are repatriated as well as impacting the maker's competitiveness in overseas markets.
In times of financial turmoil, such as Britain's recent vote to leave the European Union, the yen is often seen as a safe haven currency away from riskier assets like stocks, which drives up the value of the currency versus its major counterparts and negatively impacts exporter-based companies like Toyota and other Japanese automakers.
Toyota had initially pegged its target exchange rate at 105 yen to the U.S. dollar for the year, but the Japanese currency has been volatile and has been changing hands with the U.S. dollar in the 102 yen range.
Toyota said the yen's appreciation could see some 1.12 trillion yen eroded from its operating profit henceforth.
Tetsuya Otake, Toyota's managing officer, said the automaker will look to boost parts supplies from overseas, particularly in its U.S. market, in a bid to combat the yen's rise and said in doing so the autogiant intends to increase production there to hit its global group sales target of 10.15 million vehicles.
