Toyota Motor has raised its full year operating profit forecast and announced a share buyback worth up to 1 trillion yen, or about $6.3 billion, but investors remained unconvinced as weakening sales and rising geopolitical costs continued to weigh on the world’s biggest automaker.

The Japanese carmaker lifted its operating profit projection by 13% after sharply revising its currency assumption for the year, now factoring in an average exchange rate of 160 yen to the dollar, compared with its earlier estimate of 150 yen.

Toyota now expects operating profit of 3.4 trillion yen, approximately $21.6 billion, for the financial year ending in March. Despite the upgrade, the forecast remains about 10% below the previous financial year’s result.

Meanwhile, the company plans to repurchase up to 1 trillion yen worth of its own shares, in what represents a major capital return initiative aimed at supporting shareholder value.

However, the positive announcements failed to lift investor sentiment. Toyota shares closed 1.5% lower, with some analysts pointing to disappointment over the scale of the proposed buyback.

More importantly, the automaker’s underlying performance remained under pressure. First quarter operating profit dropped 9%, marking the company’s fifth consecutive quarterly decline and coming in slightly below market expectations.

The weakness reflects a combination of softer vehicle demand, geopolitical disruption and higher operating costs.

In particular, Toyota’s performance in China deteriorated sharply, with sales in the world’s largest automobile market plunging 28% during the quarter. Overall global sales fell 3.5%.

The Middle East has also become a growing source of pressure following the Iran war, which has disrupted supply chains, weakened vehicle demand and pushed up the cost of raw materials and components.

Toyota has, however, taken steps to limit the disruption. The company has shifted some vehicle shipments to overland routes that bypass the Strait of Hormuz, helping it maintain deliveries to Middle Eastern markets and protect earnings.

At the same time, Toyota has reduced its estimate of the financial damage linked to the Iran war. The company now expects the conflict to cost about 510 billion yen during the fiscal year, down from its earlier projection of 670 billion yen.

Even with the reduction, the impact remains substantial, covering higher prices for materials such as aluminium, delivery disruptions, weaker sales volumes and financial support for suppliers.

Currency movements have provided Toyota with an important cushion. Following a joint U.S. Japan intervention aimed at supporting the yen late last week, the Japanese currency was trading at around 157 yen to the dollar on Tuesday, recovering from levels near 164 yen last month.

The weaker yen has strengthened the value of Toyota’s overseas earnings when converted into the Japanese currency, helping the company justify its upgraded annual profit outlook.

Yet another challenge has emerged at home.

Toyota said its latest forecast does not include the potential financial impact of a deadly earthquake that struck Japan’s Kyushu island last week. The disaster forced the automaker to suspend production at four domestic plants, creating another layer of uncertainty for its supply and manufacturing operations.

Against this backdrop, Toyota’s latest outlook presents a mixed picture: favourable currency conditions and aggressive shareholder returns are supporting earnings expectations, while weaker demand in key markets and geopolitical disruptions continue to expose vulnerabilities across its global operations.

For investors, therefore, the bigger question is whether the improved currency environment can continue to offset declining sales in China, pressure in the Middle East and the rising cost of maintaining a complex global automotive supply chain.