Toyota record Q1 net profit but in warning of US sanctions

Tinuku - Toyota on Friday posted a record first-quarter net profit but warned that threatened U.S. sanctions on the auto sector could have a "very big" impact on earnings. The firm added that ongoing trade frictions between the U.S. and China, as well as Washington's tariffs on metal imports, would also eat into its bottom line. Shares in Toyota fell 0.85 percent to close at 7,220 yen after its earnings announcement.

U.S. President Donald Trump has unsettled rivals and allies alike with harsh trade rhetoric and a raft of tariffs that have affected sectors ranging from agriculture to auto. Toyota said strong sales in the U.S. and Asia, helped boost profits 7.2 percent to 657.3 billion yen ($5.9 billion) in April-June, its highest-ever first-quarter result.

Tinuku Toyota record Q1 net profit but in warning of US sanctions

Operating profit jumped 18.9 percent to 682.7 billion yen, with sales up 4.5 percent at 7.4 trillion yen. But it maintained a forecast for net profit to fall 15 percent for the fiscal year to March 2019, with lingering concerns about threatened auto tariffs and raw material costs rising amid trade tensions.

"On trade issues, we are expecting profits will decline by 10 billion yen because of (higher costs of) steel and aluminium in North America. We have not yet factored in the impact of auto tariffs. If they are imposed, we think the impact will be very big," Toyota senior managing director Masayoshi Shirayanagi said.

Company said Toyota's global sales grew as the auto giant scored growth in the key North American, European and Asian markets. Increased sales volume and marketing efforts helped boost the bottom line by 45 billion yen while cost cutting contributed 15 billion yen. Foreign exchange rates, a major factor for the industry, had little effect on its earnings for the quarter.

Last week, rival Nissan said its net profit for the three months to June plunged more than 14 percent, under pressure from rising material costs and a higher yen. It said sales were up in China in the three months to June, but fell in North America and Europe. For the year to March 2018, Toyota reported a record net profit thanks to a weaker yen and U.S. tax cuts.

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