Largest car maker now at a loss
Written on February 8, 2009
TOKYO–Toyota forecast its first annual net loss since 1950 yesterday as plunging demand for cars, especially in the U.S., and the strong yen pummelled earnings at the world’s No. 1 automaker.
Toyota Motor Corp. reported a loss of 164.7 billion yen ($2.2 billion Canadian) for the October-December quarter, down sharply from the 458.6 billion yen profit for the same period a year earlier. Quarterly sales plunged 28.4 per cent to 4.8 trillion yen.
Joining other Japanese firms expecting red ink, Toyota projected a net loss of 350 billion yen for the fiscal year through March – a stunning reversal from the record 1.72 trillion yen profit it posted the year earlier.
In December, the maker of the Prius hybrid and Camry sedan thought it could eke out a small annual net profit but the outlook has darkened since then, as the U.S. auto market collapsed.
"Toyota is having serious problems responding," said Yasuaki Iwamoto, analyst with Okasan Securities Co. in Tokyo. "It boasts a full and global line-up of products. But the world’s auto demand changed in a flash.”
Given the company cannot count on global sales picking up next fiscal year, at best it can cut costs to minimize the damage, Iwamoto said.
The last time Toyota had the equivalent of a net loss was in 1950, when it reported just parent results under different accounting standards than it uses now. Toyota, which last year overtook General Motors Corp. as the world’s best-selling automaker, is shutting production at its 11 plants in Japan for 14 days during the first three months of this year and more suspensions may be needed cash advance payday loan.
The company has said it plans to reduce its contract workers – who lack most benefits given to regular salaried workers and the tacit guarantee of lifetime employment – from 8,800 in June last year to 3,000 in March.
Executive vice-president Mitsuo Kinoshita said Toyota will cut costs and base its growth on gas-electric hybrids. "By taking these measures, we will overcome the current crisis and evolve into a company with a higher level of efficiency and resilience."
Toyota’s incoming president is a member of the founding family, Akio Toyoda, an executive vice-president. At 52, he’s considered young to head a major firm. Toyota officials and analysts say he can help bring employee ranks, group companies and dealerships together during hard times because he has the special charm of a Toyoda.
Toyota’s global vehicle sales for the October-December quarter shrank 443,000 to 1.84 million. Toyota said its yearly operating loss will balloon to 450 billion yen, its first operating loss in 70 years. Operating income excludes taxes and other items included in net profit, and often gives a picture of a company’s core business.
Toyota shares closed in New York up 57 cents (U.S.) to $69.38.
Filed in: business.