Toyota expects profit to shrink by over 30%

by Hiroko Nakata

Staff Writer

Toyota Motor Corp. said Friday it expects group operating and net profit for the current business year to drop more than 30 percent from the previous year after the March 11 earthquake and tsunami damaged key parts makers in northeast Japan.

For the year to next March, Toyota expects to make a group operating profit of ¥300 billion, down from ¥468.2 billion a year ago, and a net profit of ¥280 billion, down from ¥408.1 billion.

But it also expects to generate ¥18.6 trillion in sales, down slightly from ¥19 trillion last year.

“All of our production lines will return to normal by November,” Executive Vice President Satoshi Ozawa told a news conference in Tokyo.

The catastrophe dented production by about 220,000 vehicles in the business year ended in March. Production in the first half of the current year is projected to reach 800,000.

Even if the auto giant can ramp up production dramatically in the second half, it will still be 450,000 cars short and ¥360 billion behind in operating profit for the full year, Ozawa said.

In the first half alone, Toyota expects to incur a group operating loss of ¥120 billion and a net profit of just ¥10 billion on sales of ¥7.5 trillion.

The damage from the twin disasters, which left more than 20,000 people dead or missing, is creating even more misery for Japan’s automakers, which are taking a beating from the dollar’s continuing decline against the yen.

Toyota’s earnings outlook for the business year is based on a projected exchange rate of ¥82 to the dollar, ¥4 higher than the previous year, Ozawa said.

Toyota is also expected to lose its briefly held status as the world’s No. 1 carmaker to General Motors Co. this year.

On May 11, Toyota reported that group net profit for the year ended March 31 doubled to ¥408.18 billion as robust sales in Asia and other emerging markets overcame the negative impact of the weak dollar and natural disasters.

The results, however, fell short of the ¥490 billion forecast announced in February.