Weak Yen Offers Toyota an Earnings Respite From Tariffs, War

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Or sign-in if you have an account.dw9of[9s3juo7i(wd0dzom[6_media_dl_1.png Bloomberg(Bloomberg) — The yen’s slide to a 40-year low may be causing headaches for Japanese policymakers, but exporters such as Toyota Motor Corp. are set to reap an earnings boon, offering a much-needed respite from US tariffs, surging oil prices and strained supply chains. 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Since then, the currency has hit its lowest level since 1986 and continued to weaken. It was fetching 163.59 against the greenback in Tokyo on Thursday. Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againAnalysts currently expect Toyota to make ¥3.9 trillion yen profit this fiscal year, according to data compiled by Bloomberg. “The weak yen is a saving grace for Japanese automakers,” said Julie Boote, an analyst at London-based research firm Pelham Smithers Associates. “Currency gains will be important in lifting earnings in the first quarter. The issue is that the negative factors aren’t likely to disappear anytime soon.”Toyota’s gloomy outlook — its full-year forecast fell far short of analyst estimates for ¥4.6 trillion and was down from the ¥3.8 trillion it posted the previous fiscal year — shows how geopolitical shocks are weighing down even the industry’s most profitable carmaker. The company has said it will be difficult to offset the resulting ¥670 billion hit to its bottom line from all the turmoil.Japanese automakers face a litany of challenges, including US tariffs on cars and parts, rising energy costs and a stubborn shortage of semiconductors — as well as the ballooning cost of research and development needed to keep up with intense competition from the growing wave of technologically advanced Chinese cars in major markets.Toyota’s top suppliers are struggling with rising raw-material costs, shortages of aluminum, resins and other basic supplies and ongoing logistical snags. With barely any visibility on when inventories might run dry, it’s unclear how heavily the war in Iran could impact production, or for how long.Honda and Nissan could also gain from a weak yen, but the relief will be temporary as both companies struggle to stem the rapid decline of their auto businesses. “Toyota is likely to be one of the biggest absolute beneficiaries of a weak yen, and the same is broadly true for Japanese automakers overall in the short term,” said Bloomberg Intelligence senior auto analyst Tatsuo Yoshida. “The weaker yen should help cushion geopolitical, tariff, supply-chain and cost pressures. But it can’t eliminate them or resolve company-specific structural challenges.”This advertisement has not loaded yet.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.