Toyota warns profit to skid 20% as raw materials costs pile up

Japan’s Toyota Motor warned “unprecedented” hikes in raw material costs could slice a fifth off full-year profit on Wednesday (May 11), a clear sign the world’s top automaker by sales can no longer shrug off the supply-chain crunch that has roiled the global industry.

The home of the famed Corolla compact car said it expects materials costs to more than double to 1.45 trillion yen ($11.1 billion) in the fiscal year that started in April, which it expected to deal with by switching to lower-cost materials.

“Since the material (cost) is rising, we must work to reduce the (material) amount as much as possible, and we must also work to replace those materials with less expensive ones,” chief financial officer Kenta Kon told reporters.

Toyota had fared well during the earlier months of a global semiconductor shortage, thanks to its larger stockpile of chips, but it has now joined rivals in slashing production thanks to the prolonged crunch, as well as China’s fresh COVID-19 restrictions.

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Source: SABC News (