Toyota has repeatedly cut its monthly production targets due to global chip shortages and COVID-19 restrictions in China.

Toyota Motor reported a 42 percent hit to quarterly operating profit, worse than expected, as the Japanese automaker was hit by supply constraints and rising costs. Operating profit for the three months ended June 30 (the first quarter of 2023 for the company) fell to 578.66 billion yen, about $4.3 billion, from 997.4 billion yen for the year. same period of the previous year, which puts the finishing touch to a few difficult months for Toyota. It has repeatedly cut its monthly production targets due to global chip shortages and Covid-19 restrictions on plants located in China.

However, the magnitude of the earnings decline was much larger than investors had anticipated — analysts surveyed by Refinitiv had estimated a 15 percent drop — and seemed to catch the market by surprise: Toyota shares extended losses and fell as much as 3 percent after the results. Despite this negative quarter, the automaker maintained its full-year operating profit forecast and its plan to produce 9.7 million vehicles this year.