Business

Friday November 6, 2009

Toyota surprises with second-quarter profit


It also cuts annual loss forecast by more than half on rising sales

TOKYO: Toyota Motor Corp reported a surprise quarterly profit and slashed its annual loss forecast by more than half as sales and cost cutting beat its forecasts, putting it on track to follow Japanese rivals into the black next year.

Toyota, the world’s biggest carmaker by sales, wrapped up an earnings season dominated by rosier projections from Japanese automakers as they squeeze out savings and boost manufacturing efficiencies to offset the damaging rise in the yen.

The industry has also gotten a sales boost from government-backed incentives from Germany to China and Japan, aimed at igniting demand through the worst economic crisis in generations.

But with the outlook for demand uncertain at best as such stimulus programmes begin to run out, Toyota is looking to eliminate more spending, announcing its exit from Formula One racing on Wednesday to put its annual budget of around US$300mil to better use.

Toyota now expects an operating loss of 350 billion yen (US$3.9bil) for the year to March 31, closer to an average projection of a 293 billion yen loss in a poll of 22 analysts by Thomson Reuters.

“iQ” displayed at Tokyo Motor Show in Chiba, suburban Tokyo last month. — AFP

It expects a net loss of 200 billion yen instead of a loss of 450 billion yen.

For the July-September quarter, the maker of the Prius hybrid car reported an operating profit of 58 billion yen, down 66% from a year earlier but beating an average estimate of a loss of 63 billion yen from five analysts.

Its net profit fell 84% to 21.84 billion yen, while revenue dropped 24% to 4.54 trillion yen.

Toyota had been the only top Japanese carmaker expected to post a loss in the latest quarter, weighed down by severe overcapacity after years of building new factories during its boom years before the financial crisis hit.

Struggling US rival Ford Motor Co also reported a quarterly profit this week, defying Wall Street estimates as it seized market share from rivals General Motors Co and Chrysler as they emerged from bankruptcy.

The stronger yen, which eats into profits made abroad, has dealt a double blow because Toyota exports more than half of its vehicles built in Japan.

The second-quarter earnings mark a huge improvement from the previous quarter’s 194.9 billion yen loss, as Toyota gradually ramped up production in Japan, where demand for its Prius and other hybrid cars has shot up thanks to generous tax incentives.

But with sales in the key US market still far below their peak, Toyota is aiming to boost manufacturing efficiencies to be able to break even using just 70% of its parent-only output capacity.

Analysts expect capacity utilisation to improve regardless, with Toyota exiting a 400,000 units-a-year factory in California that it had held jointly with GM. — Reuters


For more on Toyota and other Japanese news from The Daily Yomiuri, a partner with The Star in the Asia News Network, click here


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