The maker of the Camry sedan and Prius hybrid reported net profit of 683 billion yen (US$6.4 billion) in the April-June period, up 3.9% from a year before.
The company forecast full-year net profit would rise by 14.2% to 2.15 billion yen, down from the previous forecast of 2.25 billion yen.
It cited a stronger yen but Executive Vice President Moritaka Yoshida said foreign exchange was not the only issue.
“It’s not just about foreign exchange but because of the whole environment,” he said.
“Competition is expected to be very fierce,” he added, saying the automaker could not afford to be “complacent.”
Toyota said its operating profit climbed 8.7% to 742 billion yen, citing efforts to lower raw material costs, a strong sales push and a weaker yen against the dollar during the period.
Sales grew 3.8% to 7.64 trillion yen.
Toyota said its group sales units expanded to 2.7 million in the first quarter from 2.6 million the previous year.
Satoru Takada, auto analyst at TIW, a Tokyo-based research and consulting firm, said: “Toyota is displaying a firm performance compared to its domestic rivals, as the auto industry is facing tough business conditions.”
“A potential risk is the impact of the US-China trade war. A foreign exchange loss is also among its concerns,” he told AFP before the earnings were announced.
The business environment for companies like Toyota has also been clouded by the US-China trade war and continued uncertainty from Brexit.
Yoshida said the company will continue to keep its eyes on “the potential impact on (its) businesses”.
“We want to continue to produce more vehicles locally, and this could be a countermeasure” to the potential impact of the US-China trade war, he added.
Toyota executives have said previously there would be no way to avoid a negative impact in the event of a no-deal Brexit.
Its assembly plant in Burnaston in central England, which produces 600 vehicles per day, would be affected.
The plant operates under the company’s famous “just-in-time” system, holding limited stock on-site and relying on flexible imports of millions of component car parts from the EU.
Toyota shares were down 2.83% before the lunch break but trimmed the losses in the afternoon session after the results were announced.
Toyota’s crisis-hit rival Nissan reported last month a plunge in quarterly net profit as it struggles with weak sales and fallout from the arrest of its former chief. It also announced 12,500 job cuts.
Nissan’s bottom line profit dropped to 6.4 billion yen for the three months to June.