Toyota (TM.US) Q2 operating profit surges 34%, beating expectations; strong hybrid vehicle demand and weak yen prompt another upward revision of full-year profit forecast.

Toyota (TM.US) on Thursday reported results for the second quarter of fiscal 2027. The results showed that Toyota's revenue for the second quarter of fiscal 2027 (July-September 2026) was JPY13.44 trillion, up about 8.6% from JPY12.38 trillion in the same period last year. Operating profit was JPY1.13 trillion, up 34.3% from JPY839.5 billion in the same period last year, significantly beating the median estimate of JPY992 billion from nine analysts surveyed by LSEG; operating margin was 8.4%, compared with 6.8% a year earlier. Net profit attributable to the company was JPY759.4 billion, down 18.5% from JPY932 billion in the same period last year. First-half fiscal 2027 revenue was JPY26.96 trillion, up 9.5% year on year. Operating profit was JPY2.19 trillion, up 9.2% year on year; net profit attributable to the company was JPY2.24 trillion, up 26.1% year on year. Thanks to market demand for hybrid vehicles and a weaker yen, Toyota once again raised its fiscal 2027 earnings forecast. Toyota said on Thursday that for the fiscal year ending March 2027, it expects operating profit to reach JPY3.9 trillion (about US$24.7 billion), higher than its previous forecast of JPY3.4 trillion. As the world's largest automaker, Toyota has benefited greatly from strong demand for hybrid vehicles in markets such as the United States, which has helped offset declining sales in the Chinese market, a trend that has persisted for most of this year. Earlier this week, Toyota said it plans to launch the next-generation model of the popular Corolla in China. Company executives also hinted that Toyota may launch a pure electric version of the model, which would mark a major transformation for the best-selling car in global history. In addition, Toyota is trying to turn things around by building a new plant in Shanghai. The plant will begin producing Lexus-brand electric vehicles from late 2027. After the results were announced, Toyota's Japan-listed shares surged sharply, rising as much as 15% intraday. Before the results were released, Toyota shares had already risen as much as 8.5% that day as investors optimistically expected that market expectations for a possible easing of U.S. President Trump's tariff policy would rise after a Democratic sweep in the midterm elections. Since Trump raised auto tariffs to 15% last year, Japanese automakers have collectively lost billions of yen. In addition, Toyota expanded its share buyback program by JPY300 billion to JPY1.3 trillion (about US$8.2 billion). The upper limit on the number of shares to be repurchased will increase to 610 million shares, up from 500 million shares announced in August. Toyota will launch a tender offer at JPY2,725 per share to repurchase its own shares. Mitsui Sumitomo Insurance, Aioi Nissay Dowa Insurance, Tokio Marine & Nichido Fire Insurance, and Sompo Japan Nipponkoa Insurance have agreed to participate in the tender offer sale.