TOKYO -- Toyota Motor predicted on Wednesday that its operating profit for the current financial year ended in March will decline 4.2%, as it expects the higher yen to strike hard at the company's global sales.
Japan's biggest automaker expects operating profit of 2.3 trillion yen ($21.02 billion) in the year to March 2019. It assumes the yen will trade at 105 yen to the dollar, compared to 111 yen in the previous fiscal year. The effect of the change in the exchange rate will be some 230 billion yen ($2.1 billion), raising the cost of finished products and parts when they are exported.
Toyota is targeting total group sales of 10.5 million vehicles globally, 0.5% more than the previous year.
However, its forecast of operating profit excluding foreign exchange rate is promising. It expects its cost reduction efforts to generate 130 billion yen, compared to 125 billion yen for the previous fiscal year.
Executive Vice President Koji Kobayashi said the company "has gotten over the high jump, but the bar is still shaking." He underlined that the company needs "300-400 billion yen of operating income in order not to be influenced by exchange rates," which it will accomplish by continuing cost reduction efforts in clerical jobs.