Toyota Monday hiked its full-year profit forecast to 780 billion yen ($9.7 billion) despite saying it expected to sell fewer cars due to weakness in Europe and China and a Sino-Japanese territorial row.
Japan's biggest automaker also said operating profit would come in at 1.05 trillion yen for the year to March, up from 1.0 trillion yen, while sales would be lower at 21.3 trillion yen, from 22 trillion yen forecasted earlier.
A strong yen and weaker sales outlook continued to weigh, but the upward boost in earnings expectations was largely due to what Toyota described as "profit-improvement activities".
The firm also said its net profit in the first half of the fiscal year surged more than six-fold to 548.27 billion yen on sales of 10.91 trillion yen, 36 percent higher than a year earlier when Japan's automakers were hammered by the country's quake-tsunami disaster.
"We have seen a significant increase in production in all regions compared to the same period last year when we suffered parts-supply shortages due to the Great East Japan Earthquake," Toyota said in a statement.
However the company, which beat rivals General Motors and Volkswagen for title of world's biggest automaker in the first half of 2012, said it expected to sell 8.75 million vehicles globally in its fiscal year, down from an earlier 8.8 million forecast.
The change was "due to uncertainties in the Chinese and European market environments", Toyota said.
Japan's automakers have seen a drop in China revenue stemming from a territorial spat between Tokyo and Beijing, which rival Honda last week blamed for a 20 percent cut to its annual profit forecast.
Tokyo nationalised a South China Sea island chain also claimed by Beijing in mid-September, sparking a diplomatic row marked by huge demonstrations across China and an informal boycott of Japanese exports.