Toyota Raises Operating Income Forecast to 3.9 Trillion Yen After 9.2% First-Half Rise
Toyota Motor Corporation raised its full-year operating income forecast to 3.9 trillion yen after first-half operating income rose 9.2%, as a weaker yen outweighed higher materials costs.
Toyota calls it the first profit growth in 3 years, and it came with a cost the company attributes to the Middle East. Its own bridge books a Middle East impact in two places, and the full-year forecast carries 505.0 billion yen of it. In The Edge’s reading, the weaker yen did the heavy lifting: its 685.0 billion yen contribution was 3.7 times the entire rise in operating income. Toyota credits continued improvement efforts; excluding exchange rates and swap valuation effects, its own bridge shows operating income 195.0 billion yen lower.
Revenue and profit rise in the six months to September
Sales revenues rose 9.5% to 26.96 trillion yen in the six months to 30 September.
Operating income rose 9.2% to 2.19 trillion yen. That is equivalent to $13.8bn at the half’s average rate of 159 yen to the dollar. The operating margin was 8.1% in both halves as Toyota rounds it.
Income before income taxes grew faster, by 19.2% to 2.95 trillion yen. Other income rose to 763.2 billion yen from 472.4 billion yen. The share of profit from equity-method investments reached 358.3 billion yen.
Net income attributable to Toyota Motor Corporation rose 26.1% to 2.24 trillion yen. The net margin widened to 8.3% from 7.2%. Basic earnings per share were 185.97 yen, against 136.07 yen a year earlier.
That 36.7% rise in earnings per share outpaced net income because the average number of shares outstanding fell 7.7%. The company notes that the semi-annual results are not subject to review by an auditor.
First-half results
In trillions of yen, rounded from the billions Toyota prints; changes as Toyota prints them.
| Line | H1 FY2026 | H1 FY2027 | Change |
|---|---|---|---|
| Sales revenues | 24.63 | 26.96 | 9.5% |
| Operating income | 2.01 | 2.19 | 9.2% |
| Pretax income | 2.48 | 2.95 | 19.2% |
| Attributable net income | 1.77 | 2.24 | 26.1% |
The first quarter alone had shown operating income down 8.8%, at 1.06 trillion yen. The improvement therefore came in July to September, when operating income was 1.13 trillion yen, up 34.3% from a year earlier.
That is a quarterly margin of 8.4%, up from 6.8% a year earlier. The first quarter’s margin had been 7.9%.
Attributable net income ran the other way in the quarter. It fell 18.5% to 759.4 billion yen. In the first quarter it had jumped 75.6%.
Exchange rates and the Middle East moved operating income
The company’s bridge explains the 185.4 billion yen rise in first-half operating income. Exchange rates added 685.0 billion yen, of which transactional effects supplied 590.0 billion yen.
The dollar averaged 159 yen, against 146 yen a year earlier. The euro averaged 184 yen, against 168 yen.
Marketing efforts added 165.0 billion yen. Cost reduction efforts subtracted 340.0 billion yen overall, because materials prices alone cost 465.0 billion yen.
Against that, cost reduction itself saved 125.0 billion yen. Expenses subtracted a further 20.0 billion yen, within which labour costs took 105.0 billion yen.
Other items took away 304.6 billion yen. The largest was an unrealized profit adjustment of 236.3 billion yen.
First-half operating income bridge
In billions of yen.
| Factor | Effect |
|---|---|
| Exchange rates | +685.0 |
| Marketing efforts | +165.0 |
| Cost reduction efforts | -340.0 |
| Expenses | -20.0 |
| Other | -304.6 |
| Total change | +185.4 |
Toyota says it “mitigated the impact on earnings through swift responses to changes in the external environment, including the situation in the Middle East.”
Its bridge books a Middle East impact of 125.0 billion yen inside materials prices. A further 85.0 billion yen sits inside marketing efforts.
Together that is a 210.0 billion yen adverse impact on operating income for the half, equivalent to $1.3bn at the half’s average rate. The total is not printed; it is The Edge’s sum of the two lines.
Consolidated vehicle sales in Toyota’s Other region, which covers Central and South America, Oceania, Africa and the Middle East, fell 11.2% to 758,000 units. Sales revenues in that region still rose 14.2%, to 2.66 trillion yen.
Operating income there slipped 0.5% to 200.9 billion yen, which the company mainly attributes to the effects of marketing activities. Excluding swap valuation effects it rose 8.4% to 215.8 billion yen. The company does not break out the Middle East within the region.
For the full year, the forecast bridge carries an adverse Middle East impact on operating income of 505.0 billion yen against the year before. It is 2.4 times the amount identified in the first half.
Sales shift toward hybrids across regions
Japan earned the most. Operating income there rose 12.2% to 1.25 trillion yen, mainly on exchange rates, the company said.
North America swung to operating income of 166.1 billion yen, an improvement of 234.0 billion yen. The company mainly credits lower expenses and expense reduction efforts.
Europe rose 9.2% to 219.2 billion yen, mainly on marketing efforts. Asia slipped 1.6% to 437.1 billion yen, mainly on higher expenses and other factors.
China, which the company reports as a reference line, weakened. Toyota and Lexus retail sales there fell to 685,000 vehicles from 914,000.
Operating income of Toyota’s consolidated subsidiaries in China fell to 65.0 billion yen from 122.2 billion yen. Its equity-method share fell to 28.6 billion yen from 48.0 billion yen.
Financial services operating income rose 4.9% to 472.3 billion yen, on a higher loan balance. The automotive segment’s operating income rose 7.6% to 1.60 trillion yen.
Operating income by region
In billions of yen, including swap valuation effects.
| Region | H1 FY2026 | H1 FY2027 | Change |
|---|---|---|---|
| Japan | 1,117.1 | 1,253.3 | 12.2% |
| North America | -67.8 | 166.1 | To profit |
| Europe | 200.7 | 219.2 | 9.2% |
| Asia | 444.2 | 437.1 | -1.6% |
| Other | 201.9 | 200.9 | -0.5% |
Other covers Central and South America, Oceania, Africa and the Middle East.
Consolidated vehicle sales fell 0.5% to 4.76 million units. Sales in Japan rose 5.6% to 1.02 million.
Overseas sales fell 2.1% to 3.73 million. The year-earlier total included 51,000 Hino-brand vehicles; 70 companies, Hino Motors and its consolidated subsidiaries, left the consolidation during the period.
Electrified vehicles made up 55.6% of Toyota and Lexus retail sales, up from 46.7%. Hybrid sales rose 8.3% to 2.45 million.
Battery electric sales more than doubled, to 231,000. Total retail sales fell 4.6% to 5.38 million.
The company raises its forecast and its dividend
The new forecast lifts operating income by 500.0 billion yen from the previous 3.4 trillion yen. At 3.9 trillion yen, it would be 3.6% above the year before. That is equivalent to $24.8bn at the assumed rate of 157 yen to the dollar.
Attributable net income is now expected at 3.57 trillion yen, up 320.0 billion yen from the previous forecast. That would still be 7.2% below the year before.
Sales revenues are trimmed by 500.0 billion yen, to 53.5 trillion yen. The dollar assumption moves to 157 yen, from 160 yen.
Toyota keeps its consolidated vehicle sales forecast at 9.7 million units. It says it mitigated the impact of rising materials prices and production disruptions caused by earthquakes and floods through recovery efforts at production sites and optimized global supply, keeping vehicle sales intact.
Against the year before, the full-year bridge credits improvement efforts with 1.09 trillion yen. Exchange rates add 735.0 billion yen, while materials prices subtract 980.0 billion yen.
The company also cites reduced tariff-related costs and the expansion of value chain earnings. The forecast implies second-half operating income of 1.71 trillion yen, 2.9% below the same half a year earlier.
FY2027 forecast
In trillions of yen, rounded from the billions Toyota prints.
| Line | Old | New | FY2026 |
|---|---|---|---|
| Sales revenues | 54.00 | 53.50 | 50.68 |
| Operating income | 3.40 | 3.90 | 3.77 |
| Pretax income | 4.57 | 4.96 | 5.15 |
| Attributable net income | 3.25 | 3.57 | 3.85 |
Old is the forecast of 4 August 2026; FY2026 is the actual result for the year to March 2026; the forecast year runs to March 2027.
The interim dividend is 50 yen a share, up 5 yen. It totals 588.9 billion yen. The full-year dividend forecast stays at 100 yen, also 5 yen above the year before.
Toyota raised its share repurchase authorization by 300 billion yen, to up to 1.3 trillion yen for the year. It said the increase responds to shareholders’ requests to sell their shares.
It will also cancel an additional 1 billion treasury shares, taking the year’s cancellations to 1.2 billion shares. The company values them at approximately 3.5 trillion yen at end-September market prices.
Shares issued fell to 14.59 billion at 30 September, from 15.79 billion at the end of March. Cash and cash equivalents fell 25.1% over the half, to 9.48 trillion yen.
Operating activities provided 1.60 trillion yen of cash, against 2.94 trillion yen a year earlier. Financing activities used 4.21 trillion yen.
What to watch: the semi-annual securities report, due to be filed on 12 November 2026; payment of the interim dividend on 26 November 2026.
Method: figures are from Toyota Motor Corporation’s FY2027 Semi-Annual Financial Summary and FY2027 Second Quarter Financial Results presentation of 5 November 2026, its FY2027 First Quarter Financial Summary of 4 August 2026, and its Toyota Times results report of 5 November 2026; July to September figures, quarterly margins, the 210.0 billion yen Middle East total, ratios, the implied second half and dollar equivalents (at Toyota’s first-half average rate of 159 yen and full-year assumption of 157 yen to the dollar) are The Edge’s calculations.
Sources: Toyota Motor Corporation, The Edge.
