Toyota reports 17% rise in Q1 Profit on weak Yen, cost reduction

Toyota Motor announced 17 per cent increase in its first-quarter operating profit, bolstered by cost-cutting measures and a weak yen, which helped counterbalance lower sales and production volumes in Japan. The world's leading automaker reported an operating profit of 1.3 trillion yen ($8.70 billion) for the three months ending in June, in line with analysts' expectations.

Despite challenges, including certification issues and recalls affecting production stability in Japan, Toyota managed to post a profit increase. The company acknowledged difficulties in the domestic market, partly due to a certification scandal impacting both Toyota and Lexus-branded vehicles, which dented sales in Japan.

Toyota's vehicle sales declined by 3 per cent during the quarter, with petrol-electric hybrids accounting for about 40 per cent of the sales mix. The automaker maintained its full-year profit forecast at 4.3 trillion yen, compared to the 5.3 trillion yen average estimate from analysts.

The company is currently navigating a series of scandals at its group firms related to flawed product certification test procedures, which have tarnished its reputation for safety and quality. Following the discovery of new misconduct in certification processes, the Japanese transport ministry ordered Toyota to implement drastic measures to prevent future issues.

Ahead of the earnings announcement, Toyota's share price had already declined by 5.5 per cent. Following the release, shares fell further, dropping 8.4 per cent to 2,702 yen by 0446 GMT.

(With Reuters inputs)