Toyota says annual profit drops 21 per cent, first fall in five years

Tokyo: Toyota said Wednesday its annual net profit fell for the first time in five years, with the Japanese automaker unexpectedly warning of more declines as a stronger yen takes a bite out of its bottom line.

The Corolla and Prius hybrid maker posted a profit of 1.83 trillion yen ($16 billion) on slightly lower revenue of 27.6 trillion yen for the recently ended year to March -- well down from a record 2.31 trillion yen net profit the previous year.

Toyota, which lost its crown last year to Volkswagen as the world's top-selling automaker, expects a net profit of 1.5 trillion yen in the current year to March 2018 -- way off market expectations around 1.9 trillion yen.

Vehicle sales in the past fiscal year ticked up to 10.25 million units from 10.19 million vehicles a year earlier.

Unit sales in the key North American market remained flat, while Toyota registered a pick up in Europe, Japan and the rest of Asia. Demand dropped in Central and South America, Africa and the Middle East, it said.

Japanese exporters, including major automakers like Toyota and Nissan, have benefited in recent years from a sharp drop in the yen.

A weaker yen boosts the bottom line by making their products relatively less expensive overseas, while inflating the value of profits earned abroad.

But this past fiscal year has seen sharp moves in the currency, with the Japanese unit surging after Britain's shock vote to exit the European Union boosted demand for the yen as a safe haven currency.

The trend briefly reversed course after billionaire Donald Trump's November US presidential election win fanned expectations that his big-spending, tax-cutting agenda would fire up inflation and push the Federal Reserve to hike interest rates.  A rate hike tends to lift the dollar against other currencies.