Toyota Profits Plummet 43% as Finance Chief Takes CEO Role

Toyota Motor Corporation, Japan’s leading automaker, has reported a sharp 43% decline in quarterly profits. This announcement coincides with the news that Chief Financial Officer Kenta Kon will replace Koji Sato as the new CEO and president in April. Shareholder approval for this leadership change is anticipated in June.

Toyota’s Financial Overview

For the October to December quarter, Toyota’s group profit amounted to 1.25 trillion yen (approximately €6.8 billion), a significant drop from 2.19 trillion yen during the same period last year. Over the nine-month period ending in December, profits plummeted by 26% to 3.03 trillion yen (around €16.1 billion), down from 4.1 trillion yen. Despite these challenges, Toyota’s sales increased by nearly 7%, reaching 38 trillion yen (€205.3 billion).

Impact of Tariffs and Material Costs

• The negative impact of tariffs, particularly from the United States, has considerably affected profits.
• Last year, these tariffs are estimated to have cost Toyota approximately 1.45 trillion yen (€7.8 billion).

Global vehicle sales for the nine months also saw an increase, rising to 7.3 million units from about 7 million the previous year. The growth was notably seen in markets such as Japan, North America, and Europe.

Leadership Transition

Koji Sato, who has led Toyota for the past three years, will continue contributing to the automotive industry as the chairman of the Japan Automobile Manufacturers Association (JAMA) and a leader at Keidanren, the Japan Business Federation. His decision to step down stems from a desire to prioritize these pressing responsibilities.

Kenta Kon, being an experienced veteran in various facets of the company including automated driving, is seen as a strategic choice to lead Toyota through this challenging period. He emphasized the need for flexibility and adaptation within the company, as employees tend to be cautious about implementing changes in their established systems.

Future Outlook

Despite the current downturn, Toyota maintains its full fiscal year profit forecast of 3.57 trillion yen (€19.3 billion), a reduction of 25% year-on-year. Following the leadership announcements, Toyota’s stock rose by 2%, indicating a positive market reaction.

In a statement, Toyota expressed the necessity to enhance collaborations beyond the automotive sector to facilitate its ongoing evolution into a comprehensive mobility company.