Toyota looks to log ¥150 billion loss

http://search.japantimes.co.jp/mail/nb20081223a1.html

Compiled from Kyodo, AP
NAGOYA, Hollowing out feared: Page 8 — Toyota Motor Corp. on Monday again revised downward its group earnings forecasts for this year and is now anticipating an operating loss of ¥150 billion — its first since comparable data became available for the year to March 1941 — due to shrinking global auto sales and the yen's further appreciation.

The latest projection represents a reversal from the previous estimate of an operating profit of ¥600 billion. The automaker booked an operating profit of ¥2.27 trillion in the 2007 business year.



Toyota also said it is expecting a net profit of ¥50 billion for the business year through March, down 90.9 percent from a previous estimate of ¥550 billion made in November and compared with a net profit of ¥1.72 trillion the year before.

It revised downward its group global automobile sales target for calendar 2008 by 540,000 units from the previous estimate in July to 8.96 million units, due to slowing demand amid worsening economic conditions.

The revised sales target will be 4.4 percent lower than 2007, when it sold 9.37 million vehicles worldwide, including those of subsidiaries Daihatsu Motor Co. and Hino Motors Ltd.


"The change that has hit the world economy is of a critical scale that comes once in a hundred years," President Katsuaki Watanabe said at the company's Nagoya office. The drop in vehicle sales over the last month was "far faster, wider and deeper than expected."

Sinking sales in the U.S. amid the financial crisis have dealt a heavy blow to Japanese automakers, Watanabe said, adding that emerging markets, which had held up in the beginning, are now also slowing down.

The surging yen, which erodes overseas earnings, has battered profits. The dollar has fallen to 13-year lows around the ¥87 zone recently.

Toyota changed its assumption regarding the dollar's exchange rate in the latter half of fiscal 2008 from ¥100 estimated last month to ¥93. Every ¥1 of appreciation against the dollar trims Toyota's annual operating profit by about ¥40 billion.

Toyota also slashed its global production target to 9.23 million units from an earlier target of 9.5 million units.

Given growing uncertainty over the course of its business circumstances, Toyota did not announce its sales and output plans for 2009. Usually, the firm announces the figures near yearend.

In recent years, Toyota has enjoyed annual global sales growth of around 6 percent to 8 percent.

Last week, Japan's second-largest carmaker, Honda Motor Co., announced its third downward revision to its group earnings forecast for the current business year, slashing its net profit projection by a hefty 61.9 percent due to declining global auto sales and the strong yen.

Honda also announced plans to withdraw from Formula One racing and to delay the launch of plants and models.

Nissan Motor Co. said last week it will further cut auto production and let go all temporary employees by March.