Toyota Motor Corporation (TM) predicts a 20% decrease in profit for the current fiscal year due to significant investments impacting earnings.

The report reveals that Toyota achieved breakthrough performance in the fourth quarter, with operating profit soaring by 78%, reaching a total annual profit of 5.35 trillion yen (approximately $344.5 billion), marking the first time a Japanese company has surpassed the 5 trillion yen mark. This achievement far exceeded market expectations and demonstrated Toyota's leading position in the global automotive market.

Despite strong performance in the fourth quarter, Toyota expects its operating income to decrease by 20% to 4.3 trillion yen by the end of the fiscal year ending in March 2025. This forecast reflects Toyota's increased investment in suppliers and its multi-path strategy, particularly in labor costs for human capital and support for suppliers and dealers.

Reports indicate that Toyota plans to invest 1.7 trillion yen in areas such as artificial intelligence and software to drive growth. Company CEO, Koji Sato, emphasized after the performance briefing that these investments are aimed at fortifying the supply chain and transitioning from a traditional car manufacturer to a provider of mobility solutions.

In key markets like China, Toyota faces fierce competition from local manufacturers launching software-rich electric vehicles. Toyota has unveiled two battery electric vehicles tailored for the Chinese market at the Beijing Auto Show and has partnered with Tencent (0700.HK) to strengthen its position in the electric vehicle strategy.