TOKYO: Toyota Motor Corp cut its full-year profit forecast and Honda Motor Co reported a double-digit decline in quarterly profit as a resurgent yen hurt two of Japan's biggest automakers.
The quarterly earnings unveiled on Friday by Japan's biggest and third-biggest automakers highlight how "safe-haven" demand for the currency - buoyed by global uncertainties and falling US interest rates - could eat into profits at Japanese exporters in the months to come.
Toyota cut its annual operating profit forecast by nearly 6% to 2.4 trillion yen ($22.4 billion), down from a previous forecast of 2.55 trillion yen. The 2.7% drop on the year means it will snap a three-year run of rising profit.
"We have factored in cost reduction efforts for the year, but there are still some uncertainties. We cannot be complacent," Toyota operating officer Kenta Kon told reporters at a results briefing.
It expects the yen to trade around 106 to the US dollar and 121 to the euro in the current financial year, from a previous assumption of 110 yen and 125 yen, respectively.
Toyota posted an 8.7% rise in operating profit to 741.9 billion yen ($6.93 billion) in the April-June quarter, its highest since the September 2015 quarter, helped by a slight increase in global vehicle sales.
(For a link to an interactive graph on Toyota's financial performance, click on https://tmsnrt.rs/2Xzf8Xl)
A stronger yen is already having a negative impact on Honda's profits. Japan's No. 3 automaker posted operating income of 252.4 billion yen for the April-June period, down 16% from 299.3 billion yen a year ago and undershooting analyst forecasts.
Honda, however, reiterated its forecast for a 6% increase in operating profit to 770 billion yen for this fiscal year.
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