Al Root

Toyota Motor stock fell after the company reported its fiscal-fourth-quarter results on Thursday. Guidance for the coming year came in lower than expected, with tariffs taking a bite out of profits.

The tariff impact, however, was surprisingly small. That is either a testament to Toyota's ability to offset cost increases or a risk for investors to watch.

Toyota announced a fiscal-fourth-quarter operating profit of about $7.8 billion, in line with Wall Street estimates, according to FactSet. For the fiscal year, Toyota earned north of $33 billion, down about $1 billion year over year.

Looking ahead, Toyota expects a fiscal 2026 operating profit of about $26 billion, short of the current Wall Street forecast for about $34 billion.

The guidance includes a tariff impact of about $1.2 billion, and other reasons for the gap between guidance and analyst expectations are material cost increases, unfavorable exchange rates, and higher investment.

Toyota expects to sell about 9.8 million cars in the coming 12 months, up from 9.3 million sold in fiscal 2025. That includes 2.9 million in North America, up from 2.7 million in the prior year.

Toyota stock was down 1.3% in overseas trading, while S&P 500 and Dow Jones Industrial Average futures were down 1.1% and 0.9%, respectively. Coming into Thursday trading, Toyota shares were down about 14% year to date.

Auto makers face 25% levies on imported vehicles and additional tariffs on imported car parts. Toyota imports about half the cars it sells in the U.S., according to Bloomberg.

Toyota's tariff impact looks relatively small. In the U.S., it's similar in size to Ford Motor and General Motors. Ford imports about 20% of the cars it sells domestically. GM imports closer to 45%. Ford estimated a gross tariff impact of about $2.5 billion and a net impact of $1.5 billion after mitigation efforts. General Motors estimated a gross impact as high as $5 billion, and a net impact of about $3.5 billion.

Ford and GM's numbers are for only nine months. On a quarterly basis, GM projects a net impact of about $1,400 per car. Ford's impact is closer to $1,000. Toyota's number works out to be closer to $500 per vehicle.

Exactly what mix pricing, cost, and demand assumptions are embedded in the companies' guidance is unknown.

That uncertainty continues to weigh on shares. Coming into Thursday trading, Ford stock was down about 3% since the Nov. 5 presidential election. GM shares were off 15%.

Write to Al Root at allen.root@dowjones.com

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May 08, 2025 07:29 ET (11:29 GMT)

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