UPDATE 3-Toyota expects $4.3 billion hit from Iran war fallout

In total, the impact of the Middle East crisis will ​be around 670 billion yen ($4.3 billion) in the year to the end of March 2027, Toyota said.

Toyota ​expects the fallout from the Iran war to cost ​it around $4.3 billion this financial year, the ‌world's largest ​automaker said on Friday, in one of the biggest warnings yet on the impact of the crisis on global companies. Toyota reported an almost 50% drop in quarterly ‌earnings and said it expects full-year profit to decline by a fifth in the year that just started, as rising costs and supply snarls from the war outweighed surging demand for hybrid vehicles.

The automaker expects sales of hybrids to exceed 5 ‌million vehicles for the first time ever this year. The results highlight the lopsided impact of the Middle East crisis, ‌with higher energy prices driving more customers to fuel-efficient cars but not in enough numbers to offset underlying cost pressures. Toyota reported an operating profit of 569.4 billion yen ($3.6 billion) for the three months to March 31, compared with 1.1 trillion yen a year earlier. For the current fiscal ⁠year, it expects ​an operating profit of ⁠3 trillion yen.

That outlook was well below the 4.59 trillion yen median forecast in an LSEG poll of 23 analysts. Toyota shares declined after the ⁠report and ended down around 2.2% at their lowest close since mid-October. In total, the impact of the Middle East crisis will ​be around 670 billion yen ($4.3 billion) in the year to the end of March 2027, Toyota said. That exceeded estimates ⁠given by many major companies so far, including airlines.

The latest surge in energy prices heaps further pain on an industry already grappling with U.S. ⁠tariffs ​and the rise of Chinese automakers. Volkswagen CEO Oliver Blume said this week tariffs represent a burden of 5 billion euros ($5.9 billion) a year on the German group's operating profit. Toyota said last week its sales in the Middle East ⁠fell sharply in March after shipments to the region were disrupted.

The outlook is the first issued by Toyota under ⁠new CEO Kenta Kon, who ⁠assumed his role last month and faces the challenge of steering the automaker through the impact of U.S. President Donald Trump's tariffs, which cut operating profit in the year just ended ‌by 1.4 trillion ‌yen. ($1 = 156.8000 yen)

($1 = 0.8519 euros)