Toyota profits tumble amid shortages, rising costs

STORY: Profits took a bigger-than-expected tumble at Toyota over the latest quarter.

Over the three months to the end of June, they dropped more than 40% to about $4.3 billion.

The Japanese giant was squeezed by supply constraints and rising costs.

It had to repeatedly cut output goals due to the global chip shortage.

That left customers with long waits for new cars, particularly electric vehicles, which require more chips.

Operations in China were also hit by new lockdowns.

But the scale of the damage to earnings was far beyond expectations.

Analysts had predicted a profit drop of just 15%.

The news seemed to surprise investors too, with shares in the firm dropping 3%.

Like all automakers, Toyota is also grappling with rising costs and fears that inflation could put the brakes on consumer spending.

It expects material costs for the year to rise by almost a fifth, mostly due to rising prices for metals.

Despite the grim quarter, Toyota is sticking to its profit and production targets for the year.

It says demand remains strong.