Annual net income at Toyota $TM declined 19% after U.S. tariffs stripped roughly ¥1.38 trillion ($9 billion) from operating income, with the company cautioning that conditions remain difficult going forward.
For the fiscal year that closed March 31, 2026, net income attributable to Toyota came in at ¥3.85 trillion, compared with ¥4.76 trillion in the same period a year prior. Operating income declined 21.5% to ¥3.77 trillion, with profit margins shrinking to 7.4% from 10.0% the prior year. Revenue climbed 5.5% to ¥50.68 trillion, up from ¥48 trillion the prior year.
The tariff impact was the single largest drag on operating income, according to Toyota's earnings release. Unfavorable currency exchange rates contributed an additional ¥2.03 trillion decline in expenses and earnings. North America swung to an operating loss of ¥192.5 billion for the full year, down from a profit of ¥108.8 billion in the prior period.
Operating profit for the fourth quarter came to ¥569.4 billion, a 49% decline from the same quarter a year earlier. That fell well short of the ¥813.28 billion analysts had forecast, according to CNBC. Revenue for the quarter came in at ¥12.6 trillion, in line with estimates.
"We have recently seen a significant rise in our breakeven volume due to a combination of increases in investments in human resources and future-oriented investments and the impact of U.S. tariffs," the company said in a statement.
Global vehicle sales reached 9.595 million units during the fiscal year, a 2.5% increase over the previous year's total of roughly 9.4 million. North America was the strongest-performing region, with sales climbing 8.5% to 2.934 million units.
Looking to the fiscal year through March 2027, Toyota projected both operating income and net income at ¥3 trillion, representing a reduction of more than 20% in operating income relative to the prior year. An additional ¥670 billion hit to operating income from U.S. tariffs is expected in the coming fiscal year. The company also pointed to the closure of the Strait of Hormuz, disruptions to Middle East vehicle sales, and broader supply-chain pressures stemming from the regional conflict as burdens it described as difficult to offset.
Citing heightened currency volatility, Toyota shifted to a six-month averaging period for its foreign exchange assumptions instead of the usual monthly calculation, arriving at a rate of 150 yen per U.S. dollar for the fiscal year.
Shares in Tokyo declined approximately 2.2%.
Toyota committed $1 billion earlier this year to a pair of U.S. manufacturing plants — $800 million to its Georgetown, Kentucky facility and $200 million to a plant in Princeton, Indiana — as part of a broader pledge to invest up to $10 billion in U.S. plants over five years. The Kentucky funds are earmarked to prepare the plant for a second battery electric vehicle and to expand production of the Camry sedan and RAV4 crossover.
To manage expenses, Toyota outlined plans to restructure its model lineup, source more parts locally, and eliminate inefficiencies in production. Research and development expenses hit a record high in the fiscal year, Toyota said.