Toyota sees 21% full-year profit decline as tariffs take a bite

TOKYO (Reuters) -Toyota Motor forecast a 21% profit decline for the current financial year on Thursday, as the strain from U.S. President Donald Trump's tariffs and an appreciating yen take some of the shine off strong hybrid demand.

The world's top-selling automaker expects operating income to total 3.8 trillion yen ($26 billion) in the year to March 2026, versus 4.8 trillion yen in the year that just ended. That was roughly in line with the 4.75 trillion yen average of 25 analysts surveyed by LSEG.

Toyota faces the risk of being hit by widespread fallout from Trump's tariffs, not only from the impact on its U.S.-bound exports but also because of the potential for a downturn in consumer sentiment, in the U.S. and elsewhere. price rises can lead to a decline in consumer sentiment in the U.S. and elsewhere.

The lower profit for the coming year was due to the negative impact from a stronger yen, as well as higher material prices and the impact of tariffs, Toyota said in a presentation.

Like other global automakers doing business in the world's top economy, Toyota could face high labour costs and be forced to spend more on investment if it decides to expand its U.S. production base further. 

While Toyota has seen its vehicle sales in China fall less than other Japanese automakers, it has still struggled to halt a sales decline in the world's biggest auto market amid heavy competition from Chinese brands. 

($1 = 143.7000 yen)

(Reporting by Daniel Leussink; Editing by Stephen Coates and David Dolan)