Toyota Australia posts $13.2m loss

TOYOTA Australia has blamed its second after-tax operating loss in as many years on increased market competition, unfavourable exchange rates and another tax adjustment to previous years.

Announced after business hours at 6pm last Friday, June 24, the $13.2 million net loss for Toyota Australia’s 2010-2011 fiscal year ending March 31 followed a $107.9 million loss in 2009-10.

“The Australian dollar appreciated strongly against most major currencies, placing significant pressure on the cost competitiveness of locally made vehicles relative to imports in the Australian market, and increasing profitability pressure on exports,” said Toyota Australia president and CEO Max Yasuda.

“In addition, the price of raw materials, changes in Australian vehicle market demand and increased market competition ensured that difficult conditions prevailed.”

This time last year Australia’s top-selling vehicle brand was forced to pay a $290.2 million tax bill including an “under provision” $246.7 million payment that comprised an unspecified one-off tax settlement with the Australian Tax Office for previous years.

Toyota said its second consecutive operating loss, which followed a $123.3 million profit in 2008-2009 and a record $242.2 million profit in 2007-2008, again included an unspecified tax adjustment to prior years.

Last year, Toyota said the setting of intercompany prices for products was a complex issue for all large corporations and that it had co-operated with the ATO to resolve the matter following “an intensive period of review and discussion between Toyota Australia and tax authorities”.

Once again this year, Toyota said details of its tax adjustment agreement with the ATO will remain confidential.

Before tax, Toyota Australia said it recorded a $122 million profit in 2010-2011 – down from $182.3 million in 2009-2010 – following reduced sales revenue from increased domestic and export sales.

Total sales revenue for the period was $8.2 billion (down from $8.4 billion in 2010), despite increased export sales of $1.4 billion (2010: $1.2 billion).

Including Lexus, domestic retail sales volume was 217,365 in Toyota’s last financial year – up from 214,265 in 2009-2010.

Apart from discounting, Toyota Australia said it implemented a wide range of initiatives to support the achievement of global competitiveness for its operations in response to “market environment challenges”.

“We intensified our supplier and development programs to create a sustainable local industry,” said Mr Yasuda.

“We also undertook dealer operation continuous improvement programs, a brand program reaffirming Toyota’s reputation for superior quality, and introduced new product offerings such as the Hybrid Camry, Rukus and FJ Cruiser.”

Toyota said a key highlight for both it and the industry during its last fiscal year was confirmation that Toyota Australia will manufacture new-generation four-cylinder engines for the Camry at Altona from late 2012.

“Securing the new engine plant is due to the hard work of our employees and suppliers to ensure we continue to transition the industry to compete in a future carbon-constrained world,” Mr Yasuda said.

The Toyota Australia chief also said that recovering from Japan’s devastating March 11 earthquake remained one of his company’s immediate challenges.

“We have multiple issues that must be tackled simultaneously, including addressing recovering from the impact of the earthquake, severe competitive threats and maintaining global competitiveness of our manufacturing operations,” he said.

“Despite the challenges, I am confident we will deliver the right product in the right place, at the right price, leading to sustainable growth for the local business.”

Production at Toyota’s Victorian plant resumed pre-quake levels on June 9, but was not affected by the Great East Japan Earthquake during its previous financial year.

Last month, Toyota Motor Corporation said the earthquake was largely responsible for a 77 per cent fall in net income for the final quarter of its 2010-2011 financial year, with widespread production cutbacks forcing sales down across the globe.

The announcement of Toyota Australia’s second consecutive operating loss follows Ford Australia’s second consecutive annual operating profit announcement last month, when Ford said it earned $24.9 million after tax in calendar year 2010 – almost double its $12.7 million profit in 2009 and well up on the disastrous $274 million loss amid the GFC in 2008.

It also means Holden, which recently reported a $112 million post-tax profit for 2010 following its record $210.6 million loss in 2009, was Australia’s most profitable car-maker last year.

Toyota Australia’s domestic production was slashed in half during the first two months of its current financial year, but should be boosted by the introduction of a redesigned version of its Australian-made Camry and imports of new Yaris and facelifted HiLux models by the end of 2011.