Toyota has unveiled a massive 1 trillion yen ($6.3 billion) share buyback program and raised its profit outlook, driven by robust hybrid vehicle demand and a weaker yen that helped offset rising costs, tariffs, and supply chain disruptions.
The world's largest automaker boosted its operating profit forecast for the fiscal year ending March by over 10% to 3.4 trillion yen. Analysts had projected average profits of 3.9 trillion yen. Toyota's shares erased earlier losses but still traded 1.4% lower in Tokyo afternoon trading. The company also reported first-quarter results for fiscal 2027, with sales rising 10.4% year-on-year to 13.5 trillion yen and net profit attributable to shareholders reaching 1.48 trillion yen.
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Toyota is benefiting from sustained strong sales of gasoline-electric hybrids in the United States, a technology it pioneered and championed. This advantage, combined with a weak yen in the first half of the fiscal year, provided a buffer against surging raw material costs and supply chain disruptions triggered by regional conflicts that have upended key shipping routes. The company has raised its full-year sales forecast from 51 trillion yen to 54 trillion yen.
Chief Accounting Officer Takanori Azuma told reporters the revision "reflects changes in the external environment, including foreign exchange assumptions," adding that sales had been impacted by the Middle East conflict. Currency remains a major variable for Toyota, which generates the bulk of its revenue overseas while maintaining a massive production base in Japan. The company's foreign exchange assumptions are based on a rate of 160 yen to the dollar, though the yen has rebounded past that level following coordinated intervention by Japan and the U.S. If the reversal persists, it could affect the outlook. Still, the yen's slide to 40-year lows earlier this year has been a boon for Japan's largest exporter.
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Toyota and other domestic automakers are preparing to capitalize on this brief but critical breathing room as they navigate U.S. tariffs, rising material prices, and supply chain challenges. To improve capital efficiency, Toyota plans to buy back up to 500 million shares, representing 4.2% of issued shares excluding treasury stock. The buyback will run until August 2027, with plans to cancel 200 million treasury shares, or 1.4% of issued shares, upon completion.
Operating profit for the quarter ended June stood at 1.1 trillion yen, marking five consecutive months of year-on-year decline. Toyota warned investors in May that profits would unexpectedly decline this year, citing supply disruptions from regional conflicts that were expected to hit net profit by about 670 billion yen. Its largest suppliers are grappling with soaring costs, logistics challenges, and shortages of basic materials like aluminum and resin. Given the unpredictability of the regional instability, it remains difficult to forecast how long production impacts will persist.
Global sales fell in June for the fifth consecutive month, squeezed by regional conflicts and intense competition pressuring legacy brands as they struggle to adapt to the rapid shift toward software-driven, battery-powered vehicles. Chairman Akio Toyoda has adopted what the company calls a "multi-pathway strategy" rather than betting entirely on battery electric vehicles (EVs). As consumers shy away from EV prices and charging demands, Toyota's hybrid-heavy lineup has given it an edge. Azuma indicated that hybrid sales are expected to surpass 5 million units for the first time in calendar 2026.
The Chinese market remains a weak spot, with Toyota and its Japanese peers struggling to keep pace with local manufacturers like BYD, which are rolling out cheaper, increasingly advanced battery electric and plug-in hybrid vehicles. The pressure in China is forcing Toyota to rely more on local engineers and suppliers while accelerating the development of models tailored specifically for the world's largest auto market.