Toyota Shares Fall 1.6% in New York as Investors Weigh Tariffs, Yen and China Slump Ahead of Half-Year Results

U.S.-listed shares of Toyota Motor Corp. fell on Wednesday. Investors weighed pressures on the world's biggest automaker ahead of its half-year results next month.

Toyota's American depositary shares fell $3.12, or 1.58%, to $193.56 in morning trading on the New York Stock Exchange at 10:58 a.m. EDT.

Toyota did not release any market-moving news on Wednesday. In Tokyo, the broader Topix index slipped 0.14%, while the Nikkei 225 rose 1.08% on gains in technology stocks.

Profit under pressure

Toyota has faced a run of declining profits. In August, the company reported that first-quarter operating profit fell 9%, its fifth straight quarterly decline.

Several factors have weighed on results:

China: Sales fell 28% in the quarter amid slower economic growth and a shift by Chinese buyers toward domestic electric vehicle brands. Middle East: Sales fell by about a third because of the war involving Iran, which also raised costs for raw materials and parts. United States: Sales rose only about 1% in the quarter, trailing Ford, General Motors and Stellantis, which benefited from strong pickup truck demand.

Despite those pressures, Toyota raised its full-year operating profit forecast by 13% to 3.4 trillion yen ($21.6 billion). The increase was mainly due to a weaker yen assumption. The company also announced a share buyback of up to 1 trillion yen.

Yen in focus

Currency movements are a major factor for Toyota, which earns much of its profit overseas. A weaker yen boosts the value of those earnings when converted back into Japanese currency.

The yen has weakened in recent weeks, with the dollar trading around 157 to 158 yen, near levels Toyota assumed in its forecast. Japan's finance minister said this week the government was prepared to take decisive action against excessive currency moves.

The Bank of Japan holds a two-day policy meeting starting Thursday and is expected to keep interest rates unchanged. A more hawkish stance could strengthen the yen and weigh on exporters.

Hybrids help in US

Toyota has benefited from strong demand for hybrid vehicles as U.S. gasoline prices have risen. Electrified models, mostly hybrids, made up 57.4% of Toyota's U.S. sales in the third quarter, and its electrified sales rose 28.5%.

Toyota sold 633,223 vehicles in the U.S. in the third quarter, up 0.6%, narrowing the gap with General Motors, which remains the top-selling automaker in America.

Tariffs

U.S. tariffs on imported vehicles and parts have also weighed on Japanese automakers. Toyota has said the levies have cost it billions of dollars, though it has worked to offset some of the impact through pricing and cost cuts.

Restructuring

Toyota has also been restructuring the Toyota Group. It is unwinding cross-shareholdings and taking group company Toyota Industries private, steps that include a large share repurchase.

What to watch

Investors are awaiting Toyota's results for the April-September half, expected in early November, for updates on the impact of tariffs, currency movements and weak sales in China. Investors will also watch the BOJ decision on Friday.