Toyota Motor Corp <7203.T> reported its best operating profit in two years on Wednesday, beating market estimates, and lifted its cautious forecasts despite a sluggish U.S. recovery and a stronger yen.

For the April-June quarter, the maker of the Prius hybrid reported an operating profit of 211.7 billion yen ($2.47 billion) thanks to a sharp rise in vehicle sales, swinging from a loss of 194.9 billion yen a year ago.

That was comfortably better than the average 146 billion estimated by six analysts surveyed by Reuters.

While higher than its earlier forecast, Toyota's new guidance for operating profit to total 330 billion yen in the year to March 31, 2011, is still far short of a consensus 526.5 billion yen in a survey of 21 analysts by Thomson Reuters I/B/E/S.

First-quarter net profit, which includes earnings made in China, was 190.5 billion yen, compared with a loss of 77.8 billion yen a year earlier.

After the financial crisis hammered car demand globally, Toyota has been plagued with excess production capacity, putting pressure on margins. Japan's incentives to replace old cars with fuel-efficient ones have shored up domestic production in the past year, but those subsidies will expire in September.

In the coming quarters, Toyota is expected to get the double blow of crumbling domestic sales and a stronger-than-assumed yen, which makes exports less competitive and reduces the value of profits made overseas.

Shares of Toyota have fallen 22 percent in the year to date, faring worse than Tokyo's main TOPIX index <.TOPX>, which lost about 17 percent in the same period.

(Reporting by Chang-Ran Kim; Editing by Lincoln Feast)