The strong value of Japan’s currency, the yen, is hitting Toyota’s profits.
As a result it is forecasting a bigger-than-expected 35 percent slump in net profit for the current year.
Toyota – which is Japan’s largest company – gets nearly four-fifths of its revenue from overseas which makes currency fluctuations a significant factor for its earnings.
“Earnings results in the past few years have been largely helped by foreign exchange rates,” said Toyota’s President and Chief Executive Akio Toyoda at an earnings briefing, describing the yen’s weakness as “tailwind”.
“But since the start of this year the tide has changed,” Toyoda concluded.
Toyota said it was assuming one dollar would average 105 yen this year, versus a far more favourable 120 yen last year.
Toyota did not mention any specific measures to counter the strengthening yen, but said it will continue to invest in growth.
There is “no clever scheme” or “magic wand” to counter foreign exchange headwinds, said Executive Vice President Takahiko Ijichi.
Lower profits will make it harder for the carmaker to keep investing in new technologies and products even as competition intensifies in areas like driverless and alternative-energy vehicles.
It expects global sales to inch up to 10.15 million vehicles in the year to March.