TOKYO (REUTERS) - Toyota Motor Corp on Wednesday (May 11) reported fourth-quarter profit slumped by a third, as a sliding yen and solid demand failed to offset the impact of production disruptions caused by a global shortage of chips and China’s Covid-19 restrictions. 

The world’s biggest automaker by sales posted an operating profit of 463.8 billion yen (S$4.9 billion) in the January to March quarter, well below an average estimate of 521.1 billion yen from seven analysts surveyed by Refinitiv. It compares with a 689.8 billion yen profit in the same period a year earlier. 

For the new fiscal year that began on April 1, Toyota forecast operating profit would slide about 20 per cent to 2.4 trillion yen from almost 3 trillion yen in the previous year.

That forecast is well below the 3.36 trillion yen previously expected in a poll of 25 analysts by Refinitiv. 

The yen’s sharp depreciation to two-decade lows has worked in favour of Japan’s export-driven auto industry, but rising raw material costs and global supply chain disruptions exacerbated by China’s tough Covid-19 measures are putting pressure on profitability. 

Toyota on Tuesday cut its global production target for May by around 50,000 vehicles to about 700,000 as it plans to suspend operations on 14 lines at eight domestic factories for up to six days this month due to the Covid-19 lockdown in China. 

The plan follows several cuts in its production plan between April and June, which had frustrated its suppliers.

This is another example of automakers being forced to cut back production as a result of Covid-19 lockdown in Shanghai.

Tesla has halted most of its production at its Shanghai plant due to problems securing parts for its electric vehicles, according to an internal memo seen by Reuters.

Shanghai is in its sixth week of an intensifying lockdown that has tested the ability of manufacturers to operate amid hard restrictions on the movement of people and materials.