Sharp Cost Increases Cancel Out Toyota's Foreign Exchange Benefit in Its Fiscal Second Quarter

Toyota’s fiscal 2023 second quarter saw large competing headwinds and tailwinds with the headwinds winning and sending operating margin down 380 basis points year over year to 6.1%. We are leaving our yen fair value estimate in place, but a much weaker yen against the U.S. dollar since our last update causes the translation of our yen model to dollars to yield a fair value estimate of $157, down from $171. We now translate our yen fair value estimate at JPY 148.19 to the dollar compared with JPY 136.10 previously.