Toyota Motor's profit slumped a worse-than-expected 42% in its first quarter as the Japanese automaker was squeezed between supply constraints and rising costs.
Operating profit for the three months ended June 30 sank to 578.66 billion yen ($4.3 billion) from 997.4 billion yen the same time a year ago, Toyota said today, capping a tough period.
It has repeatedly cut monthly output goals due to the global chip shortage and Covid-19 curbs on plants in China.
The scale of the earnings hit was far beyond expectations - analysts polled by Refinitiv had estimated a 15% drop - and appeared to catch investors by surprise. Toyota's shares extended losses, sliding 3%.
Despite the grim quarter, the automaker stuck to both its forecast for full-year operating profit and its plan to produce 9.7 million vehicles this year, citing what it said was strong residual demand.
Profit in the quarter was hit by constraints in supply, lower sales and a rise in materials costs, a Toyota spokesperson said.
"We were not able to produce enough, with customers globally waiting for their vehicles to be delivered," the spokesperson said.
Delivery times are longer for electrified vehicles because they require more semiconductors, the spokesperson added.
Like other car manufacturers, Toyota is grappling with higher costs and fears that global inflation could put the brakes on consumer demand.
It expects material costs for the full year to increase by 17% to 1.7 trillion yen from its previous estimate - the majority of the increase reflecting a rise in the price of steel and aluminium.
But Toyota's current production woes mark a departure from its initial success in navigating supply chain problems in the early stages of the pandemic.
The carmaker cut its monthly production targets three times during the April-June quarter, falling 10% behind its initial goals, due to shortages of semiconductors and the impact of Covid-19 lockdowns in China.