Toyota Motor Corp. said Thursday it made record sales and profits in the business year to March 31 but warned that operating profit may fall by 29.5 percent in the 2008 business year, marking the first decline in nine years.
The yen’s surge against the dollar, rising raw materials costs, as well as slumping sales in the U.S. market — Toyota’s largest source of profit — are expected to dent profits in the year to next March, said the world’s largest automaker in terms of output.
In the year that ended in March, Toyota posted ¥26.29 trillion in group sales, up 9.8 percent from the previous year, and saw its operating profit increase 1.4 percent to ¥2.27 trillion and its net profit grow 4.5 percent to ¥1.72 trillion.
Backed by strong growth in emerging markets, its 2007 sales and profits reached all-time highs.
However, Toyota expects operating profit to fall by 29.5 percent to ¥1.6 trillion in the current year.
Its net profit for the year to next March is forecast to drop 27.2 percent to ¥1.25 trillion, with sales also expected to fall 4.9 percent to ¥25 trillion.
“The trend (in the business environment) has changed since late last year,” Toyota President Katsuaki Watanabe told a news conference, citing the U.S. economic slowdown triggered by the subprime mortgage loan crisis and slump in European markets.
Watanabe said the big challenge Toyota faces this year is the strong yen and rising raw materials costs.
The dollar’s fall against the yen weighed on Toyota’s forecast, which is now based on an exchange rate of ¥100 to the dollar and ¥155 to the euro. In the last business year, the dollar averaged ¥114 and the euro ¥162.
“The total impact of the yen’s rise against all currencies would shave ¥690 billion off the group’s operating profit in the full year (to March 2009),” said Toyota Senior Managing Director Takeshi Suzuki.
Toyota expects a decline in auto sales in North America in the current business year, but sales in Asia and other fast-growing economies are expected to help lift overall global sales.
Toyota said it plans to reduce its capital investment for the current business year by ¥80.2 billion to ¥1.4 trillion.