Tariffs dealt a heavy blow to Toyota Motor Corp. Sponsored ADR (TM.US): Q4 operating profit slashed by half, new fiscal year profit guidance reduced by over 20%

Toyota Motor Corp. Sponsored ADR (TM.US) released its financial report on Friday, showing that revenue for the fourth quarter ending in March was 12.60 trillion yen, a 1.9% increase year-on-year, in line with market expectations; operating profit plummeted 49% to 569.4 billion yen, far below the market's expectation of 813.28 billion yen; net profit was 817.2 billion yen, compared to 664.6 billion yen in the same period last year. This marks the fourth consecutive quarter of year-on-year decline in operating profit for Toyota Motor Corp. Sponsored ADR, reflecting the ongoing pressure from US tariffs. Data shows that Toyota's comprehensive vehicle sales in the fourth quarter decreased from 2.36 million units in the same period last year to 2.29 million units. Looking to the future, Toyota Motor Corp. Sponsored ADR has lowered its operating profit guidance for the fiscal year ending in March 2027 by over 20%, to 3 trillion yen, while increasing its annual sales guidance by 0.6%. The world's largest automaker stated in its financial report: "Due to increased human resources and future-oriented investments, as well as the impact of US tariffs, our recent profit and loss volume has increased significantly." Toyota added that it has begun taking a series of measures to improve profitability, including "reforming fixed costs, achieving cost improvements, and launching sales plans at all levels in all regions, groups, and internal companies." According to a report released by Price Target Research on May 5, Toyota Motor Corp. Sponsored ADR's asset productivity declined slightly from 2016 to 2025, while asset turnover also decreased. Toyota is facing several challenges, including slowing car sales in China, vehicle recalls, increased competition in the electric vehicle sector, and the tariffs imposed by the Trump administration. Due to pressure on consumer purchasing power and rising fuel prices due to conflicts in the Middle East, the company's sales in the US market are weak. Previously released data showed that Toyota Motor Corp. Sponsored ADR sold 211,617 vehicles in the US in March 2026, an 8.5% decrease year-on-year. Additionally, Toyota has been adjusting its production plans to adapt to tariff policies and other regulatory changes. In March, the company announced a total investment of $1 billion in two factories in the US, which is part of its plan to invest up to $10 billion in the US in the next five years. Following the release of the financial report, Toyota's stock fell 1.34% on the Tokyo Stock Exchange on Friday.