The maker of the Camry sedan and Prius hybrid is investing aggressively in new plants and vehicle technology, chasing profitable growth in all markets and an internal target of 15 percent of the global auto market some time in the next decade.
"The results were neither positive nor negative," J.P. Morgan Securities analyst Eiji Kawahara said. "As expected, full-year profits should no doubt exceed last year's results."
Toyota, which does not give group-based profit forecasts, repeated it would at least try to match last year's record operating profit of 1.667 trillion yen ($16 billion), despite assuming a more conservative 100 yen to the dollar for the final quarter.
"Overall, our spending on investments for future growth has been high, and that will likely continue into 2006," Senior Managing Director Takeshi Suzuki told a news conference.
He added, however, that that did not mean profits would fall since the seeds of its past investments were also bearing fruit.
Analysts have said Toyota's biggest challenge now is to make sure its rapid expansion comes without compromising vehicle quality and diluting its famously engrained culture of seeking out opportunities to cut waste.
This year, Toyota starts up a new plant in the Czech Republic while building more cars in China, Argentina and South Africa. A sixth North American car plant is being built and Toyota is mulling a seventh site to meet future demand. October-December group operating profit was 422.90 billion yen, while net profit grew 3.5 percent to 296.53 billion yen.
The dollar averaged 106 yen during the quarter, down three yen from the year before. A seven-yen rise in the euro to 137 yen helped cap currency-related losses at 10 billion yen.
Revenues climbed 5.9 percent to 4.644 trillion yen, fuelled by healthy sales of high-margin models such as the Mark X luxury sedan in Japan and Lexus-brand vehicles in the United States.
"During the third quarter, we exceeded our sales targets in every region," Executive Vice President Ryuji Araki said in a statement.
Driven by the brisk demand, Toyota nudged up its global sales forecast for the full year to March 31 by 70,000 units to 7.29 million for the group, which includes minivehicle maker Daihatsu Motor Co and truck maker Hino Motors Ltd.
Toyota's fortunes contrast sharply with Detroit's General Motors Corp and Ford Motor Co, which are burdened by staff health-care costs and rely heavily on their financing arms for profits.
Both reported lower automotive earnings in the latest quarter as they offered discounts and incentives to get cars off dealer lots. Even then, they lost market share to Japan's Big Three - Toyota, Honda Motor Co and Nissan Motor Co.
Toyota expanded US sales by 10 percent to over 2 million units for the first time in 2004, giving it a 12.2 percent share of the world's most lucrative car market.
While Honda and Nissan are weak in certain regions, Toyota has grown everywhere, including Japan where it already controls 44 percent of the world's number-two car market.
Toyota's sales grew 3.5 percent in Japan in the latest quarter, while in North America they rose 2.6 percent. In Europe, sales jumped 14 percent thanks to a fuller line-up of diesel cars, and Toyota expects another bumper year in 2005.
Last week, Japan's number-three auto maker Honda posted 6.9 percent lower quarterly operating profit as a weaker dollar dented US earnings, but it lifted its full-year forecasts on strong European and Asian sales.
Nissan, reporting next Wednesday, is expected to post higher third-quarter profit on strong US sales growth.
Shares in Toyota, which the market values at $141 billion - more than Nissan and Honda combined - fell 1.2 percent during the quarter, in line with a 1.4 percent dip in Tokyo's transport sector sub-index ITEQP.Tokyo's broader TOPIX stock index gained 4.3 percent over the same period.
Toyota shares closed flat at 4,060 yen on Thursday ahead of the results. The TOPIX lost 0.21 percent.