Toyota’s Net Profit Rises, But Operating Profit Falls

Toyota Motor Corp.’s net profit grew 11% to 613 billion yen ($5.5 billion) in the fiscal first quarter ended June 30. But the impact of unfavorable exchange rates and higher sales incentives cut operating profit 11% to 574 billion yen ($5.2 billion).

The company’s revenue in April-June climbed 7% to 7.1 trillion yen ($63.6 billion). Until sales advanced 2% to 2.59 million cars and trucks, including those sold by its Daihatsu minicar and Hino truck units.

Like many carmakers, Toyota is struggling with a product mix that contains too many slow-selling sedans and not enough popular SUV/crossovers. In the U.S., for example, cars have accounted for only 38% of passenger vehicle sales so far this year, according to Autodata Corp. But Toyota’s mix for the period was 43% cars.

The company also declares to commit heavier investments on such technologies as connectivity, artificial intelligence and self-driving cars.

Toyota says marketing costs cut its quarterly operating profits by 30 billion yen ($271 million). Losses on exchange rates trimmed another 35 billion yen ($316 million). But the company foresees improvement in both areas ahead, and it raises its full-fiscal year earnings guidance.