gcarter
05-08-2009, 08:10 AM
Financial Times FT.com
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Toyota reveals first annual loss in years
By Jonathan Soble in Tokyo
Published: May 8 2009 07:21 | Last updated: May 8 2009 12:49
Toyota Motor (http://markets.ft.com/tearsheets/performance.asp?s=jp:7203)on Friday revealed a Y766bn ($7.7bn) net loss for the latest quarter – a bigger deficit than its US rival General Motors (http://markets.ft.com/tearsheets/performance.asp?s=us:GM)– and warned that it would remain deeply unprofitable in the current financial year.
The grim outlook ran counter to a recent bout of investor optimism surrounding Toyota and other Japanese automakers, which some believe have put the worst of the global car industry crisis behind them. Share prices in the sector have risen 40 per cent or more during the past month.
Toyota said on Friday it expected to sell a million fewer cars and trucks in the year to March 2010 than it did last year, a decline that would put it back to its turnover levels of 2003, when the fast-growing company had significantly less production capacity.
Its projection of 6.5m vehicle sales was well short of the 7m it says it needs to be profitable today even after stringent cost cuts.
A year ago, Toyota was celebrating record-high earnings as it rolled past GM to become the world’s biggest car producer. It has kept that position during the downturn, but only thanks to even sharper declines in sales and output at the US group, which is dependent on government aid and struggling to stay out of bankruptcy.
Like other Japanese manufacturers, Toyota has been hit by a jump in the value of the yen as well as plunging worldwide demand.
Toyota’s loss for the full accounting year to March, totalling Y437bn, was the first for the company since at least 1950, when it fell into crisis following the second world war. The carmaker also cut its annual dividend nearly 30 per cent. Toyota had warned of a smaller loss of Y350bn.
The group’s Y550bn projected deficit for this year also came as a surprise and drew suggestions that the company was being deliberately conservative.
“Toyota issued four profit warnings last year and lost the confidence of the market,” said Koji Endo, an analyst at Credit Suisse. “They absolutely do not want to revise down this year.”
The carmaker said it had not taken into account the potential demand-boosting impact of new car scrapping incentives and green-car tax breaks in Japan and Europe.
Toyota’s performance compared unfavourably with that of Honda, its smaller Japanese rival, which lost Y1.9bn in the latest quarter but expects to make money this year thanks to its focus on relatively brisk-selling compact cars and motorcycles. GM lost $6bn in the latest quarter (http://www.ft.com/cms/s/0/7053ff16-3afc-11de-ba91-00144feabdc0.html) and Ford suffered a $1.4bn loss.
Standard & Poor’s cut Toyota’s long-term debt rating to AA from AA+.
Toyota has responded to the crisis by slashing production, cutting pay for workers and managers and eliminating thousands of short-term contract jobs. Katsuaki Watanabe, chief executive, said he hoped a new version of the pioneering Prius petrol-electric hybrid, which goes on sale this month in Japan, would be a “saviour” for the company.
http://media.ft.com/FTCOM/Images/ftlogo2.gif
http://media.ft.com/t.gifCOMPANIES
http://media.ft.com/t.gifAutomobiles
Toyota reveals first annual loss in years
By Jonathan Soble in Tokyo
Published: May 8 2009 07:21 | Last updated: May 8 2009 12:49
Toyota Motor (http://markets.ft.com/tearsheets/performance.asp?s=jp:7203)on Friday revealed a Y766bn ($7.7bn) net loss for the latest quarter – a bigger deficit than its US rival General Motors (http://markets.ft.com/tearsheets/performance.asp?s=us:GM)– and warned that it would remain deeply unprofitable in the current financial year.
The grim outlook ran counter to a recent bout of investor optimism surrounding Toyota and other Japanese automakers, which some believe have put the worst of the global car industry crisis behind them. Share prices in the sector have risen 40 per cent or more during the past month.
Toyota said on Friday it expected to sell a million fewer cars and trucks in the year to March 2010 than it did last year, a decline that would put it back to its turnover levels of 2003, when the fast-growing company had significantly less production capacity.
Its projection of 6.5m vehicle sales was well short of the 7m it says it needs to be profitable today even after stringent cost cuts.
A year ago, Toyota was celebrating record-high earnings as it rolled past GM to become the world’s biggest car producer. It has kept that position during the downturn, but only thanks to even sharper declines in sales and output at the US group, which is dependent on government aid and struggling to stay out of bankruptcy.
Like other Japanese manufacturers, Toyota has been hit by a jump in the value of the yen as well as plunging worldwide demand.
Toyota’s loss for the full accounting year to March, totalling Y437bn, was the first for the company since at least 1950, when it fell into crisis following the second world war. The carmaker also cut its annual dividend nearly 30 per cent. Toyota had warned of a smaller loss of Y350bn.
The group’s Y550bn projected deficit for this year also came as a surprise and drew suggestions that the company was being deliberately conservative.
“Toyota issued four profit warnings last year and lost the confidence of the market,” said Koji Endo, an analyst at Credit Suisse. “They absolutely do not want to revise down this year.”
The carmaker said it had not taken into account the potential demand-boosting impact of new car scrapping incentives and green-car tax breaks in Japan and Europe.
Toyota’s performance compared unfavourably with that of Honda, its smaller Japanese rival, which lost Y1.9bn in the latest quarter but expects to make money this year thanks to its focus on relatively brisk-selling compact cars and motorcycles. GM lost $6bn in the latest quarter (http://www.ft.com/cms/s/0/7053ff16-3afc-11de-ba91-00144feabdc0.html) and Ford suffered a $1.4bn loss.
Standard & Poor’s cut Toyota’s long-term debt rating to AA from AA+.
Toyota has responded to the crisis by slashing production, cutting pay for workers and managers and eliminating thousands of short-term contract jobs. Katsuaki Watanabe, chief executive, said he hoped a new version of the pioneering Prius petrol-electric hybrid, which goes on sale this month in Japan, would be a “saviour” for the company.