Japanese auto giant Toyota on Feb. 6 revised up its full-year forecast but warned of an uncertain outlook with the car industry bracing for Donald Trump’s U.S. presidency with his expected protectionist agenda.
The firm, which lost its crown as the world’s top-selling automaker last year, said a drop in the value of the yen had allowed it to lift its earnings, despite a fall in its nine-month net profit.
It said net profit fell 24 percent to 1.43 trillion yen ($12.7 billion).
However, the maker of the Prius hybrid forecast a full-year net profit of 1.7 trillion yen, up from its earlier estimate of 1.55 trillion yen. That was already up from an earlier 1.45 trillion outlook.
In a statement it said the upward revision was “based on the current trend of financial results, due to changes in foreign currency exchange rates and the upward revision of our sales plans.”
Japanese exporters have enjoyed a boost since the November election of Donald Trump as U.S. president as the yen has weakened on expectations his big-spending, tax-cutting plans would fire inflation and force the Federal Reserve to hike interest rates.
A weaker yen boosts exporters’ bottom lines by making their products relatively less expensive overseas, while inflating the value of their earnings abroad when repatriated.
But the latest forecast is far below the record 2.31 trillion yen net profit in the year to March 2016.
Strong criticism by Trump
The Japanese auto industry faces uncertainty over Trump’s drive to support U.S. firms over foreign imports, a stance that has raised fears of a possible global trade war.
He has targeted Toyota with strong criticism of its ongoing project to build a new factory in Mexico, threatening it with painful tariffs.
“It is difficult to forecast the impact of the Trump administration at this time,” Toyota executive Tetsuya Otake told reporters.
Shigeru Matsumura, an analyst at SMBC Friend Research Center, said the outlook for the Japanese auto industry faced “political risks.”
“Toyota and other Japanese carmakers have tough steering to do on their strategies in North America,” he said before the earnings announcement.
Toyota CEO Akio Toyoda met Prime Minister Shinzo Abe on Feb. 3 ahead of a Japan-U.S. summit this week, with the auto trade row one of the key issues.
Toyoda declined to comment on details of his meeting with Abe, but said: “We discussed the current situation.”
Toyota, Suzuki agreed to boost cooperation
Separately, Toyota and small car maker Suzuki agreed on Feb. 6 to begin detailed discussions on a technology tie-up as well as mutual supply of products and components after announcing initial plans in October.
“What the companies have agreed on is to create a partnership which will be win-win for both parties, not one in which Toyota would rescue Suzuki,” said Suzuki chief executive Yasuhito Harayama.