Japanese auto giant Toyota says it expects profits to fall sharply over the next year as it deals with US tariffs and instability in the Middle East.
The company forecast a 22% drop in net profit for the fiscal year ending next March.
Toyota also reported that its net profit for the last fiscal year fell 19.2% to 3.8 trillion yen, or about $25 billion.
Despite the profit decline, revenues still rose 5.5% to 50.7 trillion yen, and the company expects sales to increase slightly again this year.
Toyota said stronger vehicle sales and price adjustments helped support profits, but rising costs and global tensions continue to weigh heavily on the business.
The company specifically pointed to the impact of US tariffs and the ongoing conflict in the Middle East as major challenges.
Even though Japan reached a deal to invest $550 billion in the United States in exchange for reducing planned tariffs from 25% to 15%, Toyota says the remaining duties are still hurting automakers.
The company also reported an operating loss in North America last year.
Toyota CEO Yoichi Miyazaki said management is taking the situation seriously, especially as the company faces a third straight year of weak earnings growth.
He added that Toyota has worked to reduce costs and improve profitability, but it still has not fully overcome the pressure caused by tariffs and Middle East developments.
According to the company, the impact of the Middle East situation alone could cost Toyota around 670 billion yen this year.
