Toyota Mirai logo-01

Toyota Motors has reported a profit of 2.31 trillion yen (RM85 billion) for the financial year ending year in March 2016 – a record figure for the third time in a row. Toyota, however, expects its net profit to decline at the end of the current financial year, ending in March 2017, the Wall Street Journal reports. The company expects a 34% drop in net profit, down to 1.5 trillion yen (RM55 billion) due to a strengthening currency.

Last year, one dollar traded at approximately 120 yen. The weak yen benefitted the Japanese automaker greatly, allowing it to gain profit, as its products could be sold cheaper, globally.

In addition to that, strong vehicle sales coming from North America had also bolstered the company’s profits thanks to an increasing demand of SUVs. The strong appetite for SUVs there helped Toyota counter declining sales in Europe, Asia, Africa and its home market, Japan. On that note, it projects sales volumes to rise in said markets this year.

2016 Toyota Rav4 US-01

This year, the company predicts an average exchange rate of 105 yen to the dollar – cutting operating profit by at least 935 billion yen (RM34 billion) in the current financial year. “Until now, we benefited from currencies and our profits expanded beyond our actual capabilities. But since the beginning of this year, the tide has greatly shifted,” said Akio Toyoda, president of Toyota Motor Corp.

Meanwhile, the BBC reports that the Japanese automaker is also expecting weaker demand from key markets such as the US and China this year. Toyoda stated that without the assistance from a weaker yen, the company must work harder to boost sales. Elsewhere, the company is planning to raise research and development spending more slowly this year.

Additionally, Toyota hopes that its newly announced reorganisation exercise – which divides Toyota into smaller, more independent units – will intensify and enhance its efforts of producing desirable cars. According to Toyoda, the company had become too inflated to make decisions quickly. “I think that this year will be a test of whether we can transform our intentions into reality,” Toyoda said.