Toyota Motor Corp. reported Thursday it suffered a ¥55.99 billion net loss for the first half of the business year amid slumping global demand but forecast brighter earnings for the full year.
The loss contrasts with the large profit the world’s largest automaker scored a year ago before the global economy went into a tailspin.
Toyota posted a ¥493.47 billion net profit for the April-September half of 2008.
“Our earnings results continued to reflect the tough situation,” said Executive Vice President Yoichiro Ichimaru.
Toyota now expects a ¥350 billion group operating loss and a ¥200 billion net loss for the full year, better than its initial forecast of a ¥750 billion operating loss and a ¥450 billion net loss.
The automaker logged a ¥136.86 billion group operating loss in the first half, down from the ¥582.07 billion operating profit it logged in the same period last year.
Toyota meanwhile reported a better than expected ¥21.8 billion net profit for the July-September quarter after losing ¥77.8 billion in April-June.
The automaker, which has Daihatsu Motor Co. and Hino Motors Ltd. under its wing, said it now expects group sales of 7.03 million units for the full year, up from 6.6 million in its initial forecast.
“Due to incentives by many governments, the auto market has been energized more than we had expected. Our lineup of environmentally friendly cars such as hybrids also helped,” Ichimaru told a news conference in Tokyo.
“But such incentives will end in many markets by the end of the year, and we have to be cautious about the forecast,” he added.
Toyota released the earnings report just a day after announcing it is withdrawing from Formula One racing, joining other Japanese companies, including Honda Motor Co. and tire maker Bridgestone Corp., in exiting the major motor sport after coming under pressure from the severe business environment.
The news added to a series of recent decisions by Toyota to focus on research and development in the automobile sector.
Toyota said in September it will sell its brokerage unit, Toyota Financial Services Securities Corp., to Tokai Tokyo Financial Holdings Inc.
In October, it said it will spin off its housing business within a year.
Toyota’s earnings figures for the first half of the business year are in contrast with its rivals. Honda posted a ¥90.71 billion group operating profit and a ¥61.6 billion net profit for the April-September term, while Nissan Motor Co. logged a ¥94.88 billion operating profit and a ¥9 billion net profit.
Analysts say Toyota’s aggressive global expansion in recent years, when the world economy was growing, left it handcuffed when it had to hack away at bloated production after the financial crisis struck last year.
“Toyota was more inclined to have a negative impact on its earnings than other automakers, such as Honda, once demand started to weaken, because it was operating with a full lineup, particularly in the North America,” said Chizuko Satsukawa, an associate director at Standard & Poor’s in Japan.
In particular, its massive capital spending around the world is expected to weigh on Toyota’s earnings for a while, an auto analyst at a Japanese research institute said.
But for the longer term, analysts say there will be some bright factors, including rapid growth in China.
“There had been expectations that the auto industry might face a sharp slump again, but the worst, such as between last January and March, seems to be over,” Satsukawa said.