Toyota hit by Iran war costs £3bn as material prices surge

Toyota on Friday disclosed that the war linked to Iran raised parts and material costs and depressed sales, producing an estimated hit of around £3 billion to its results for the fiscal year to March. The company said the squeeze came from higher input prices and logistical disruption tied to the Middle East conflict, which weighed on profitability.

According to the firm's disclosure, the largest single item was a 400 billion yen increase in material costs attributable to the conflict, while lost sales accounted for roughly 270 billion yen. Operating profit for the year fell to about 3.8 trillion yen, and the company also flagged a 1.38 trillion yen impact from US tariff measures. Toyota’s chief accounting officer, Takanori Azuma, said management did not believe it could fully offset a combined negative Middle East impact of about 670 billion yen.

The move is a stark illustration of how geopolitical shocks in the Gulf have reverberated through global manufacturing. Toyota sold 9.6 million cars in the year, around half of them hybrids, and reported modest growth in global sales driven by a 9% rise in North America. Still, rising fuel, transport and raw material costs — including higher tyre and aluminium prices — have put pressure on margins across the supply chain.

More broadly, the closure risks in the Strait of Hormuz and related security incidents have pushed energy and commodity prices higher, exacerbating cost pressures for energy-intensive and export-reliant producers in Asia. Insurers and freight markets have adjusted rates, and some suppliers face force majeure and longer lead times, creating an environment of elevated operational risk for multinational manufacturers.

Market commentators expect Toyota to pursue a combination of measures — targeted price increases, cost cutting, supply‑chain reallocation and hedge strategies — to protect margins. The company forecast lower operating income for the coming year, targeting around 3 trillion yen, and investors will watch closely for how quickly management can stabilise margins amid persistent commodity and geopolitical volatility.