Toyota Motor Corp today announced a 39% decrease in operating profit for the fiscal first quarter ending June, compared to the year earlier. The company said slowing sales in US and Europe, higher purchasing cost of basic materials and a strong yen, impacted profits.

The company registered an operating profit of $3.8 Billion compared to $6.17 Billion a year earlier. This was also the second straight quarter that Toyota’s operating profit has fallen.

“The environment surrounding our business has taken a sharp turn for the worse, leading to a very tough first quarter,” Executive Vice President Mitsuo Kinoshita told a news conference. “It will be crucial for us to act quickly and flexibly to overcome this.”

The cumulative global sales for the first quarter rose to 2.186 Million vehicles, up from 2.162 million vehicles during the same period last year, led by brisk sales in Asia and the middle east.

The company hopes to offset the extra cost of raw materials by cutting costs.

The company has also brought down sales forecast for every region it opeartes in. The sales forecast in US for the year is 2.63 million vehicles down from the projected 2.77 million, while forecast for home market Japan stands at 2.17 million vehicles down from the earlier projection of 2.2 million units.

Sales forecast for the European market stands at 1.29 million down from the earlier 1.39 million units while forecast for the Asian region is now 1.06 million units from earlier 1.10 million units.

The Toyota group includes mini-vehicle maker Daihatsu and truck manufacturer Hino Motors.