(Alliance News) - Toyota Motor Corp on Thursday said it is reducing its full-year outlook owing to the impact of US tariffs, as currency movements weighed on its earnings.

The Aichi, Japan-based automotive manufacturer said net income attributable to the company fell 37% to JPY841.35 billion, about USD5.72 billion, in its first quarter than ended June 30 from JPY1.333 trillion a year prior. Diluted earnings per share fell to JPY64.56 from JPY98.99.

Sales revenue however increased 3.5% to JPY12.253 trillion from JPY11.838 trillion, as consolidated vehicle unit sales in Japan and overseas rose 7.1% to 2,411,000 units.

By region, overseas vehicle unit sales rose 5.4%, or by 100,000 to 1.93 million, while Japan sales edged 14% higher, by 60,000 to 481,000.

The drop-off in earnings amid the top line growth can be attributed to a mix of increased costs and adverse currency movements.

Cost of financial services rose 13% to JPY719.81 billion from JPY634.94 billion, contributing to a 5.3% rise in total operating expenses to JPY11.087 trillion from JPY10.529 trillion.

Further hampering the bottom line were foreign exchange losses, as Toyota swung to foreign exchange net loss of JPY212.38 billion from a net gain of JPY237.00 billion.

Shares in Toyota Motor closed down 1.5% at JPY2,680.00 on Thursday in Tokyo.

Also on Thursday, Toyota said it plans to establish a new vehicle manufacturing plant in the Teihoucho area of Toyota City, with operations planned to start at the location in the early 2030s.

The company noted than it is also working on developing a "plant of the future" that uses cutting edge technology.

Looking ahead, the carmaker lowered its outlook for the financial year that ends in March 2026 year due to the impact of US tariffs.

Toyota now forecasts operating income for financial 2026 of JPY3.200 trillion, revised down from JPY3.800 trillion guided at its full-year results in May. In financial 2025, operating income was JPY4.796 trillion.

Attributable net income is now expected to come in at JPY2.660 trillion, revised down from JPY3.100 trillion and compared to JPY4.765 trillion in financial 2025.

The company is still forecasting sales revenue of JPY48.500 trillion, up 1.0%, and a total dividend per share of JPY95, flat on-year.

"Despite a challenging external environment, we have continued to make comprehensive investments and as well as improvements such as increased unit sales, cost reductions, and expanded value chain profits, thereby minimising negative impacts," the company said.

"We will work with all stakeholders, including suppliers and dealers, turn to leverage the results of our foundation-building efforts to further improve productivity," added Toyota.

By Christopher Ward, Alliance News reporter

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