Toyota Says Rising Costs of Raw Materials Will Slice 20% of its Full Year Profit

Japan based car maker Toyota Motor Co. (TYO: 7203) has warned that the increasing cost of raw materials will eat up to 20% of its full year profit while reporting its fourth quarter results in which recorded a 33% decline in operating profit.

Toyota is expecting the price of raw materials to more than double to 1.45 trillion yen ($11.1 billion) for the fiscal year which started in April the company says it will approach this by switching to lower-cost raw materials.

We need to think about how we can respond to material inflation by eliminating the distinction between original equipment manufacturers and suppliers and working together as one. Since the price of materials is rising, we need to work to reduce the amount of materials we use as much as possible and to replace them with less expensive materials,” said the company’s CFO, Kenta Kon.

The car maker also expects to sell 8.85 million cars across the world this fiscal year this represents a 7.5% increase compared to the vehicles it sold globally last year. The company is also expecting its operating profit to drop to 2.4 trillion yen signifying a 20% decline from the almost 3 trillion yen it reported last year.

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