Toyota Announces a Stock Repurchase and Raises Its Yearly Outlook; Shares Decline

The largest automaker in the world, Toyota (7203.T), announced a share repurchase of up to 1 trillion yen ($6.3 billion) and increased its 2017 operating profit prediction by 13% on Tuesday to reflect a significantly softer yen.

However, with Toyota reporting a 9% decrease in first-quarter operating profit—its fifth consecutive quarter of decline and somewhat below expectations—some fundamentals continued to be negative. China’s declining sales have damaged it, while the war in Iran has hurt Middle Eastern sales and raised the price of parts and raw materials.

Additionally, Toyota pointed out that the tragic earthquake that struck Japan’s Kyushu island last week, which forced it to halt production at four domestic facilities, was not taken into consideration in its upward revision. The automaker’s stock ended the day down 1.5%.

After drastically changing its yen estimates to 160 yen to the dollar from 150 yen, the Japanese automaker now projects operational profit of 3.4 trillion yen ($21.6 billion) for the current fiscal year ending in March. Toyota said in a statement, “We continuously improved our marketing efforts, including increased sales supported by the establishment of alternative logistics routes to the Middle East, in addition to revised foreign exchange assumptions.”

It reduced its assessment of the effects of the Iran conflict to 510 billion yen this fiscal year from its earlier estimate of 670 billion yen, citing increased costs for raw materials including aluminum, supply delays, decreased sales volumes, and assistance for suppliers. Nevertheless, that continues to rank among the biggest wartime earnings losses reported by a multinational corporation to date.

Overall, throughout the quarter, Toyota’s worldwide sales decreased by 3.5%. Its sales fell 28% in China, the largest automobile market in the world.