Toyota Motor reports a nearly 28% decline in operating profit for the third quarter, falling below estimates

Toyota Motor reported its second consecutive quarterly profit decline on Wednesday, while also announcing plans to establish a new company in China focused on electric vehicle (EV) production, aiming to catch up with competitors in the EV market.

For the quarter ending in December, Toyota's revenue reached 12.39 trillion yen, surpassing analyst estimates of 12.1 trillion yen. However, operating profit fell to 1.22 trillion yen, missing the 1.39 trillion yen forecast, marking a nearly 28% drop year-on-year. This follows a 20% decline in operating profit the previous quarter.

Despite this, net income attributable to the company rose to 2.19 trillion yen, up from 1.36 trillion yen the previous year. Toyota’s consolidated vehicle sales for the quarter also decreased to 2.44 million units, compared to 2.55 million units in the same period last year.

The company maintained its full-year dividend forecast at 90 yen, up from 75 yen last year, and raised its operating income forecast by 400 billion yen to 4.7 trillion yen for the financial year.

In a move to expand its EV capabilities, Toyota will create a new wholly-owned company in Shanghai, China, to develop and produce Lexus BEVs and batteries, with production expected to start in 2027.

Despite the profit decline in key regions like North America and Asia, Toyota’s stock rose over 1% in Tokyo on Wednesday. The company has been slower than some competitors in embracing fully battery-powered electric vehicles, focusing more on hybrids.