Finance

Finance

Toyota foresees $5 billion loss

06 February 2009 08:54 (UTC +04:00)

Bakuâ€“ APA-Economics. Japanâ€™s Toyota Motor Corp, the worldâ€™s biggest carmaker, has warned it faces an operating loss of almost $5bn for the fiscal year to March as it struggles to cut production fast enough to match plunging worldwide sales, Aljazeera reports.
Announcing its latest quarterly results on Friday Toyota said its expected its full-year loss would be now be three times what it had forecast just six weeks ago.
If confirmed the yearly loss would be the biggest faced by the company in its 70 year history.
For the latest quarter alone, from October to December 2008, the company said it saw an operating loss of $3.97bn with little sign that the market is anywhere near recovering.
The company released its latest earnings data after the close of Fridayâ€™s trade on the Tokyo stock market.
For the year to March Toyota officials said they are now predicting a loss of 450 billion yen ($4.95bn), a sharp downturn from the 150 billion yen loss forecast in December.
Toyotaâ€™s operating profit stood at 2.27 trillion yen ($24.98bn) a year earlier, but it is now struggling to cut production after years of building new plants to keep up with demand.
Like other Japanese carmakers, Toyota has been hit hard by the twin effects of the global slump set off by the US financial crisis combined with the rising value of the yen which has eroded overseas earnings.
Toyota shares have lost about half their value over the last year amid a plunge on the Tokyo stock market.
Last year, the Japanese auto giant dethroned General Motors Corp for the first time in global vehicle sales, a position the American company had held for 77 years.
General Motors posted an 11 per cent drop in sales for the year, while Toyota sales fell four per cent.
Car makers around the world are enduring one of the worst periods in the history of the industry as anxious consumers shun showrooms amid the fallout from the credit crunch and increasing job cuts.
In anticipating the projected loss, Moodyâ€™s Investors gave Toyota a negative rating outlook, saying the downgrade was "driven by the significantly impaired state of profitability".
Since its previous forecast in December, Toyota has announced additional reductions in production plans, but analysts say even those may not go far enough.
"The drop in global demand is growing more serious," Shinya Naruse, auto analyst with Nomura Securities in Tokyo, said.
"Itâ€™s difficult to see when things are going to bottom out, and thatâ€™s why thereâ€™s no end yet to the rounds of production adjustments."