TOKYO: Toyota Motor Corp. lowered its annual profit forecast while Honda Motor Co. turned in a double-digit decline in quarterly earnings as a resurgent yen hurt two of Japan’s biggest automakers.
The quarterly earnings unveiled on Friday by Japan’s biggest and third-biggest automakers highlight how “safe-haven” demand for the currency — buoyed by global uncertainties and falling US interest rates — could eat into profits at Japanese exporters in the months to come.
A strengthening yen hurts Japanese automakers as cars exported from Japan become more expensive, while it also decreases the value of earnings made overseas.
Toyota cut its operating profit forecast for the year ending March 2020 by nearly 6% to 2.4 trillion yen ($22.4 billion), from a previous forecast of 2.55 trillion yen. The 2.7% drop on the year means it will snap a three-year run of rising profit.
“We have factored in cost reduction efforts for the year, but there are still some uncertainties. We cannot be complacent,” Toyota Operating Officer Kenta Kon told reporters at a results briefing.
It expects the yen to trade around 106 to the US dollar and 121 to the euro in the current financial year, from a previous assumption of 110 yen and 125 yen, respectively.
For the quarter just ended, however, Toyota posted an 8.7% rise in operating profit to 741.9 billion yen ($6.93 billion), its highest since the September 2015 quarter, helped by a slight increase in global vehicle sales.
But the stronger domestic currency took a toll on Honda’s profits. Japan’s No. 3 automaker posted an operating income of 252.4 billion yen for the April-June period, down 16% from 299.3 billion yen a year ago and lagging analyst forecasts.
Still, Honda reiterated its forecast for a 6% increase in operating profit to 770 billion yen for this fiscal year, and said it expected the yen to average around 110 to the US dollar, unchanged from its previous forecast.
Global impact
Easing demand for cars has also dented earnings at Honda and other automakers including Nissan Motor Co. and Ford Motor Co, prompting the latter two to announce job cuts and plant closures.
An escalating trade war between China and the United States, the world’s top two auto markets, and slowing economic growth have prompted a broad-based sales downturn in the global auto sector.
“Conditions in the US market continue to be severe, including the effects of the trade friction between the US and China,” Honda Executive Vice President Seiji Kuraishi told reporters, adding that tensions could also have a negative impact in China, where demand for cars is already slowing.
“How the Chinese market reacts to the US-China trade friction will be key to setting our business strategy.”
A downturn in the global auto sector could weigh on profits just as automakers invest heavily in new technologies including electric cars, autonomous driving technologies and ride-sharing services to survive a industry shift away from car ownership.
Toyota has been pouring money in ride-sharing services including Uber, Grab and Didi Chuxing while deepening alliances with SoftBank Group Corp. to develop on-demand transportation services in Japan, to position itself as a provider of mobility services.
Investors have backed this strategy, pushing Toyota shares roughly 10% higher this year, outperforming its domestic rivals.
Honda too has been scrambling to reinvent itself to compete with tech firms such as Google parent Alphabet and Uber, by expanding partnerships and investing in General Motors Co’s Cruise self-driving vehicle unit.
Stronger yen prompts Toyota to trim profit forecast, saps Honda
Stronger yen prompts Toyota to trim profit forecast, saps Honda
- A strengthening yen hurts Japanese automakers as cars exported from Japan become more expensive
Closing Bell: Saudi main index slips to close at 11,228
RIYADH: Saudi Arabia’s Tadawul All Share Index slipped on Sunday, lost 23.17 points, or 0.21 percent, to close at 11,228.64.
The total trading turnover of the benchmark index was SR2.99 billion ($797 million), as 170 of the stocks advanced and 82 retreated.
On the other hand, the Kingdom’s parallel market Nomu gained 449.38 points, or 1.90 percent, to close at 24,093.12. This comes as 43 of the stocks advanced while 27 retreated.
The MSCI Tadawul Index lost 6.07 points, or 0.40 percent, to close at 1,511.36.
The best-performing stock of the day was Obeikan Glass Co., whose share price surged 7.54 percent to SR27.66.
Other top performers included Alamar Foods Co., whose share price rose 6.80 percent to SR47.10, as well as Saudi Kayan Petrochemical Co., whose share price climbed 6.79 percent to SR5.66.
Saudi Investment Bank recorded the steepest drop, falling 3.21 percent to SR13.56.
Jahez International Co. for Information System Technology also saw its share price fall 3.15 percent to SR13.55.
Rabigh Refining and Petrochemical Co. declined 2.78 percent to SR7.34.
On the announcements front, Tanmiah Food Co. reported its annual financial results for the period ending Dec. 31. According to a Tadawul statement, the company recorded a net loss of SR18.8 million, compared with a net profit of SR95.8 million a year earlier.
The net loss was mainly due to ongoing market challenges that resulted in continued pricing pressures in fresh poultry, inflationary cost pressures, higher financing expenses, and depreciation and ramp-up costs from new facilities, partially offset by increased production volumes and cost-optimization initiatives.
Tanmiah Food Co. ended the session at SR58.20, up 3.72 percent.
United International Holding Co., also known as Tas’heel, announced its annual financial results for the period ending Dec. 31. A bourse filing showed the company recorded a net profit of SR273.64 million in 2025, up 23.05 percent from 2024, primarily driven by a 23.4 percent rise in revenues. The revenue growth helped lift gross profit by 23.7 percent.
Tas’heel ended the session at SR146.80, down 0.28 percent.
