Toyota raises profit forecast, announces $6.3 billion buyback as shares fall

Toyota Motor Corp. raised its annual operating profit forecast by 13% and announced a share buyback of up to 1 trillion yen, about $6.3 billion, but the stock still moved lower.

A much softer yen helped Toyota’s latest numbers, alongside solid car sales and resilient demand in the United States and India. Strong sales across regions also improved as semiconductor shortages eased, giving the world’s biggest automaker a lift in a quarter that reflected healthier operating conditions even as investors stayed cautious about what comes next.

The yen move is central to the story. Because Toyota earns heavily overseas, a weaker Japanese currency increases the value of that income when it is converted back into yen. That makes the company especially sensitive to exchange rates, and it also helps explain why a stronger forecast did not automatically translate into a stronger stock reaction.

Toyota will repurchase shares worth up to 1 trillion yen and plans to cancel some shares. The program is equal to as much as 4.22% of outstanding stock. Buybacks can support earnings per share and show confidence in a company’s valuation, but they do not eliminate investor concerns about pricing pressure, tariffs, or the cost of keeping pace with the electric-vehicle transition.

Toyota’s size gives the announcement outsized weight across the auto sector. Its results are watched as a read on demand in Japan, the United States, Europe and China, and its capital-return decisions are closely followed by suppliers and rival manufacturers. In September 2024, Toyota expanded a share buyback plan after its share price dropped, a reminder that management has used repurchases before to steady sentiment when the market turned skeptical.

This time, the company paired the larger repurchase with a higher profit outlook, yet investors still looked past the headline improvement and toward whether Toyota can defend earnings once exchange-rate tailwinds fade.