Toyota hit by chip shortages and rising costs

Toyota is grappling with higher costs and concerns that global inflation will dampen consumer demand. AKHTAR SOOMRO/REUTERS

DECRYPTION – The world’s number one automobile saw its operating profit drop by 42% during the quarter.

The world number one is in turn shaken by the disruptions in the automotive industry. Until then, Toyota had been more spared by the shortage of semiconductors than its major Western competitors.

The Japanese manufacturer saw its net profit fall by 17.9% over one year in the first quarter, to 736.8 billion yen (5.4 billion euros). And its operating profit collapsed by 42%, to 578.6 billion yen, despite sales up 7%, to 8491.1 billion yen. Toyota cut its monthly production targets three times in the quarter due to global chip shortages and restrictions on factories in China due to Covid-19. “We have not been able to produce enough, with customers around the world waiting for their vehicles to be delivered,” Toyota spokesman said.

The magnitude of the decline in operating profits surprised analysts and investors. “It’s extremely bad”

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