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Toyota Expects Annual Profit to Fall 31 Percent

Friday, 10 Jun 2011 07:19 AM

 

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Toyota forecasts its annual profit to dive 31 percent, in an outlook that assumes a robust recovery from the earthquake and tsunami in the coming months.

Toyota Motor Corp. had not given an earnings forecast earlier because of uncertainties about its production outlook after the March 11 disaster wiped out key parts suppliers in northeastern Japan.

Toyota on Friday forecast a 280 billion yen ($3.5 billion) profit for the fiscal year through March 2012, down from 408 billion yen for the previous fiscal year.

Most of its earnings will come in the second half of the fiscal year as it is expecting only a 10 billion yen ($125 million) profit for the first half, down drastically from 289 billion yen a year earlier.

Its annual sales through March 2012 are projected to slip 2 percent to 18.6 trillion yen ($232.5 billion) from 18.99 trillion yen the previous year.

Last month, the maker of the Prius hybrid and Lexus luxury models said January-March quarterly profit crumpled more than 75 percent to 25.4 billion yen ($314 million) because of the parts shortages that are hurting production.

For the fiscal year ended March 2011, Toyota's earnings doubled to 408.1 billion yen ($5 billion) from 209.4 billion yen the previous year. Annual sales edged up 0.2 percent to 18.99 trillion yen ($234 billion).

Those numbers highlighted how Toyota had been on its way to a recovery from the recall fiasco affecting 14 million vehicles worldwide, which had battered its reputation for quality.

Still, it is expected to lose its spot as the world's top-selling automaker to General Motors Co. this year because of the disasters.

Executive Vice President Satoshi Ozawa brushed off fears about slipping from the top.

"There is absolutely no importance in being No. 1," he told reporters. "Our vision is to make good cars and make customers happy."

Those good cars will lead to a better society as well as to company profits, which Toyota can invest in making more good products, said Ozawa.

Toyota is now expecting to sell 7.24 million vehicles for the fiscal year through March 2012, down from 7.31 million vehicles in the previous year.

For the January-March period, Toyota sold 1.79 million vehicles worldwide. That is fewer than the 2.22 million vehicles GM sold and fewer than No. 3 automaker, Volkswagen AG of Germany, at 1.99 million.

Another problem that Toyota, as well as other Japanese automakers, are facing is an electricity shortage after the quake and tsunami destroyed a nuclear power plant in northeastern Japan.

Another nuclear plant in the region where Toyota is headquartered is also being shut down because of growing fears about the safety of nuclear power after reactor cores at the Fukushima Dai-ichi nuclear plant melted and spewed radiation into the air and the sea.

Japanese automakers are being asked to reduce electricity use by 15 percent in July through September. They are having workers produce vehicles on weekends instead of Thursday and Friday to avoid electricity blackouts during peak demand periods.

Ozawa said Toyota planned to do its best to cut electricity use.

Toyota has seen vehicle sales fall in North America, Japan and Europe, although it has had robust sales in other regions, such as the rest of Asia, Africa and South America.

Toyota is especially struggling in the U.S., where its May sales fell 33 percent from a year earlier to 108,387 vehicles because of earthquake-related shortages.

© Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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