Toyota (7203.T) is forecast to post a fifth straight quarterly operating profit decline this week, hit by weaker vehicle sales and rising costs, as investors gauge the impact of last week's earthquake in southern Japan.
The world's biggest automaker is expected to report 1.11 trillion yen ($7.04 billion) in profit for the April-June quarter on Tuesday, down 5% from a year earlier, according to the median estimate of eight analysts surveyed by LSEG.
Analysts said weaker sales volumes in some overseas markets and rising costs across the supply chain linked to the conflict in the Middle East likely weighed on earnings during the period.
Global sales of Toyota and Lexus vehicles fell 3% to just over 2.5 million units in the first quarter, with sharp declines in China and the Middle East outweighing modest growth in the United States.
Investors will also be looking for clues on the fallout from a deadly earthquake that struck Japan's Kyushu island last week, disrupting production at suppliers and forcing Toyota to halt output at four domestic plants.
Toyota has suspended production at three plants in the region through Wednesday and halted output at another plant in central Japan through Friday. Two of the four plants are vehicle assembly sites.`
The uncertainty was highlighted on Friday when supplier Aisin (7259.T) said it could not say when output at a damaged plant near the quake's epicentre would resume. About 200 people were working on recovery efforts at the site.
Global sales in the quarter were dragged down by a 28% decline in China and a one-third drop in the Middle East.
"The first quarter could be a bit tougher than expected," said Christopher Richter, autos analyst at CLSA, adding that sales volumes appeared weaker than expected during the quarter.
Richter said Toyota had also posted weak sales in Oceania and Latin America, where BYD (002594.SZ) and other Chinese brands are expanding aggressively.
Toyota's sales in Oceania fell 16%, while those in Central and South America were down 5%.
The conflict in the Middle East, which began in late February, has pushed up prices for materials including aluminium and naphtha and disrupted vehicle shipments to the region, analysts have said.
Toyota has also faced pressure on U.S. sales from the transition of its outgoing RAV4 sport utility vehicle to a redesigned version of one of its best-selling models globally.
Richter said investors would be keen to hear details about when the company expects the model's sales to accelerate.
Analysts will also be looking for any change to Toyota's 3 trillion yen operating profit forecast for the current financial year, particularly as higher material costs and earthquake-related disruptions cloud the outlook.
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