Toyota Motor Corp reported fiscal third-quarter operating income that outpaced analyst expectations, with the company pointing to robust sales volumes and the currency tailwind of a weak yen as key supports against continued tariff pressure from the United States.
For the three months ended December 31, Toyota recorded operating income of 1.191 trillion yen, down from 1.215 trillion yen in the prior quarter. The result nevertheless came in above the Bloomberg consensus of 1.06 trillion yen.
Net income attributable to shareholders declined by more than 40% year-on-year to 1.257 trillion yen in the quarter, while revenue rose by nearly 8% to 13.457 trillion yen.
Management raised its full-year operating profit forecast to 3.8 trillion yen from a prior 3.4 trillion yen, citing the combination of stronger sales, the weak yen and ongoing cost-reduction efforts. Toyota also increased its revenue projection for the fiscal year to 50.00 trillion yen, up from the earlier forecast of 49.00 trillion yen.
At the same time, the company trimmed its projected annual vehicle sales to 9.75 million units from 9.80 million units. Toyota attributed the downgrade to production disruptions in Brazil and persistent headwinds related to U.S. import duties. The company also indicated that sales in China are expected to remain under pressure amid a diplomatic dispute between Tokyo and Beijing.
U.S. import levies remain a material margin consideration for Toyota. Although U.S. tariffs on some Japanese goods were reduced from 25% following a trade agreement with Tokyo, vehicles and related imports continue to be subject to a 15% levy - a drag that management said eroded margins over the past year.
In a concurrent leadership change, Toyota said CEO Koji Sato will step down from the chief executive role and that CFO Kenta Kon will assume the CEO position. Sato will continue with the company as vice chairman and chief industry officer.
The quarter's results show how currency, volume and cost measures can offset some external pressures, while production disruptions and trade levies continue to pose constraints on sales and margins. Toyota also remains identified as one of the most-preferred Japanese stocks for 2026, according to the company statement.
Summary
Toyota beat operating-income estimates in Q3, lifted its full-year operating-profit and revenue forecasts, reduced its vehicle-sales outlook, and announced a CEO change. The company cited strong sales, a weak yen and cost-cutting as drivers of the improved profit forecast, while noting Brazil production issues and U.S. tariffs are weighing on volumes and margins.