Toyota (TM.US) Q2 operating profit fell 27% year-on-year, lower than expected, but raised full-year profit and sales guidance.

Toyota Motor Corp. Sponsored ADR (TM.US) announced its financial performance for the second quarter of its 2026 fiscal year ending September 30. The financial report shows that Toyota's Q2 revenue was 12.38 trillion yen, an 8% increase from the same period last year's 11.44 trillion yen; operating profit was 839.6 billion yen, a 27% decrease from the same period last year's 1.16 trillion yen, marking the second consecutive quarter of year-on-year decline and falling short of analysts' general expectation of 863.1 billion yen; net profit was 932 billion yen, a 62% increase from the same period last year's 573.7 billion yen. Looking ahead, the world's largest automaker expects its operating profit for the 2026 fiscal year ending March 31, 2026 to be 3.4 trillion yen (a 29% decrease year-on-year). Although this forecast is lower than analysts' general expectation of 3.9 trillion yen, it is higher than the company's forecast of 3.2 trillion yen in the first quarter financial report, due to cost-cutting efforts and strong sales of hybrid cars expected to help offset the impact of U.S. import tariffs. The company forecasts full-year revenue for the 2026 fiscal year to be 49 trillion yen, with a net profit of 2.93 trillion yen. The company also expects full-year car sales in 2026 to reach 11.3 million units, higher than the previous estimate of 11.2 million units. Previously, the trade agreement reached between Japan and the U.S. avoided the worst-case scenario of tariffs on cars and car parts. Following the agreement reached in July, the U.S. imposed a 15% tariff on cars and components from Japan, a significant increase from the previous 2.5% rate but much lower than the additional 25% tariff threatened by former U.S. President Trump. Toyota stated that its full-year financial guidance for the 2026 fiscal year reflects the negative impact of 1.45 trillion yen on its operating profit due to U.S. tariffs. The company added that the U.S. tariffs in the first half of the 2026 fiscal year had a negative impact of 900 billion yen on its operating profit.