Japanese auto giant Toyota hiked its annual net profit and sales forecasts for the 2024 financial year on Wednesday, saying it now expects net profit of 4.52 trillion yen (US$29.5 billion), up from 3.57 trillion yen.

The "upward revision incorporates progress in strengthening earning power, backed by improvement efforts including product competitiveness", the company said.

The revision reflected efforts to strengthen its earnings power through keeping a lid on incentives, raising prices and stabilising production, Toyota said in presentation materials. It also expects to gain from a weak yen.

Toyota made the revision even though it posted weaker-than-expected earnings for the third quarter for which it booked its second successive quarterly profit decline.

Operating profit for the three months through December totalled 1.22 trillion yen, down 28 percent from a year earlier.

In recent quarters, Toyota's profit was pushed higher by strong hybrid vehicle demand in the US and other major markets.

By region, operating income in North America, which includes its top market by vehicle sales, the United States, fell by 63 percent over the first nine months of the financial year mainly due to a decrease in sales volume and higher personnel-related costs.

Operating income in China also declined during that period, pressured by higher marketing costs as the automaker sought to retain market share amid heavy competition from Chinese EV brands.

Toyota said it would establish a wholly owned company in Shanghai to develop and produce electric vehicles and batteries for its luxury Lexus brand, with production set to start in 2027 and have an initial capacity of around 100,000 units a year.

Last week, Toyota reported global group unit sales of 10.8 million vehicles for 2024, making it the world's best-selling automaker for a fifth successive year. (Agencies)