Toyota trebles loss forecast
BY IAN PORTER | 9th Feb 2009
The latest warning came barely five weeks after Toyota broke the news to shareholders that it was about to report its first full-year loss in 71 years.
The Nagoya-based giant now expects to post an operating loss of 450 billion yen ($A7.28b) for the 12 months. That is three times the loss of 150 billion yen ($A2.47b) forecast on December 22.
The revised forecast was released when executive vice-president Mitsuo Kinoshita revealed Toyota’s dismal third-quarter trading results to the Tokyo stock exchange on Friday, February 6.
Mr Kinoshita said revenues had plunged 28.4 per cent in the three months to December, while the sprawling group’s operating results slumped from a profit of 602 billion yen ($A9.94b) to a loss of 361 billion yen ($A5.96b).
“Both revenues and profits declined severely during this period,” he said.
“The negative results are due to lower vehicle sales volumes under difficult market conditions mainly in the US and Europe, and the rapid appreciation of the yen against the US dollar and the Euro.”There was no news on whether Toyota would pay a dividend for the second half of the year. Directors declared a 65 yen-a-share payout after first half earnings crashed 54 per cent to 582 billion yen ($A9.6b). That absorbed more than one third of the profit, which amounted to 157 yen ($A2.59) a share.
At least some people were not surprised by then sudden downwards revision of the December forecast.
Investors pushed Toyota’s shares up 3.3 per cent to 3190 yen on the Tokyo stock exchange in early afternoon trade.
Mr Kinoshota said Toyota’s sales volumes forecast for the full trading year to March had also been revised downwards.
Sales were now expected to reach 7.32 million cars and trucks, 220,000 below the December forecast but a heavy 17.8 per cent below the 2007-08 sales of 8.91 million, which helped deliver to Toyota global market leadership for the first time.
Mr Kinoshita said the company would expand the scope of the “emergency value analysis” program started after the half-year results were announced, aiming to reduce fixed costs by 10 per cent.
He said the “emergency profit improvement committee” – headed by former president Katsuaki Watanabe – would look at profit improvement projects in the long, medium and short terms.
“We will focus more on how we can maximise revenues, by developing a new product line up that responds to the customers’ requirements in each region.
“For the mid-term, we plan to enhance the development of hybrid and compact vehicles which we believe are the keys to our future growth,” he said.
Mr Kinoshita also indicated Toyota would be looking at some softer targets to save money.
“We are aiming to implement a more effective cost structure in the areas of research and development, production and sales operations.”A breakdown of Toyota’s sales performance in the third quarter showed that most of the pain was incurred in Japan, the US and Europe, while the “rest of the world” (Central and South America, Oceania, Africa and the Middle East) did comparatively well.
Although vehicle sales in Japan, where Toyota has a steely grip on more than 40 per cent of the market, were down only 14 per cent to 465,000 units in the third quarter, earnings slumped by 554 billion yen ($A9.2b) to a loss of 164 billion yen ($2.7b).
This disproportionate reaction was caused mainly by the appreciation of the yen against the US dollar as export earnings are included in the domestic earnings results.
In North America, sales slumped 31 per cent in the three months to 235,000 units while earnings slumped 311 billion to a loss of 247 billion yen ($A4.07b).
Once again, this result was exacerbated by financial factors, thanks to a loss of 120 billion yen ($A1.92b) on interest rate swaps gone wrong.
European sales were down 24 per cent to 235,000 units, and earnings dropped 77 billion to a loss of 43 billion yen ($708m).
Asia, excluding Japan, was fairly calm in comparison, with sales volumes off 7.9 per cent and earnings down 37 per cent to a profit of 40.5 billion yen ($A709m).
The rest of the world grouping posted a similar performance, with sales down 8 per cent and earnings down 32.9 per cent to 33.5 billion yen.
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