Toyoda Gosei earnings buoyed by volumes, cost improvements

Kiyosu, Japan – Toyoda Gosei has reported a 16% year-on-year increase in operating profit for the second quarter of fiscal 2026, ending 31 March 2027, supported by higher sales volumes and cost improvements.

For the three months ended 30 Sept, operating profit rose to Yen38.2 billion (€216 million), from Yen32.9 billion a year earlier, the Japanese automotive supplier reported 29 Oct.

Second quarter revenue increased 13.5% to Yen608 billion, from Yen535.6 billion, reflecting the consolidation of Ashimori Industry (ERJ report) and favourable foreign exchange movements.

Toyoda Gosei said profit increased "despite the impact of the Middle East situation," supported by "higher sales volume and the effects of new products" as well as cost improvements.

The supplier reported a Yen12.3 billion positive impact from “kaizen,” its continuous improvement activities, and a Yen4.6 billion benefit from higher sales.

These gains helped offset Yen6.3 billion in price revisions, Yen4.7 billion in higher material costs and Yen4.8 billion in salary increases.

Fixed costs also increased by Yen3.1 billion.

By region, in the second quarter, Japan reported revenue of Yen261 billion, up 17.5% year-on-year, while operating profit increased to Yen10 billion, from Yen7.6 billion.

The group attributed the improvement to "sales increase and cost improvement", despite headwinds from the Middle East situation.

In the Americas, revenue rose 14.8% to Yen238 billion, while operating profit increased 14% to Yen16 billion, from Yen14 billion.

The region benefited from higher sales and cost improvements, although material prices, salary increases and fixed costs continued to weigh on earnings.

Europe and Africa recorded revenue of Yen16.8 billion, up 7.7% year-on-year, with operating profit increasing to Yen1 billion, from Yen900 million, mainly due to cost improvements.

In China, revenue declined 13.7% to Yen36.6 billion, reflecting lower sales volumes.

Operating profit, however, increased to Yen1.5 billion, from Yen800 million, as fixed-cost reductions and cost improvements offset the sales decline.

Revenue in Asia, excluding China, increased 20.9% to Yen84.6 billion, with operating profit rising to Yen7.3 billion, from Yen6.6 billion, supported by cost improvements.

India posted revenue growth of 23.8% to Yen29.1 billion, but operating profit fell to Yen2.2 billion, from Yen2.5 billion.

The decline reflected "increased fixed costs from upfront investments and wage increases", according to Toyoda Gosei.

Looking ahead, the supplier maintained its full-year fiscal 2026 earnings forecast, despite anticipating a "greater-than-expected market downturn".

The Japanese group said it expected further cost improvements, including the effects of new products and measures to curb fixed costs.

Full-year revenue is forecast at Yen1,200 billion, up 4.7% from fiscal 2025, while operating profit is expected to reach Yen80.0 billion, up 0.6%.

Toyoda Gosei also maintained its capital investment forecast at Yen72 billion and R&D expenditure at Yen47 billion.