Standard & Poor’s said Wednesday that Toyota Motor Corp.’s weaker earnings results for the April-June quarter will not affect its AAA long-term debt rating with a negative outlook or its A-1-plus short-term rating.
S&P said Toyota, which reported Tuesday a 9.7 percent year-on-year decline in group net profit to 222.59 billion yen, is facing increasing pressure from global competition and intensified pricing pressure will continue in the April-September first half of fiscal 2003.
“The negative outlook on the rating primarily reflects concerns over this intensifying pricing pressure amid a cyclical weakening of demand in the U.S. and its impact on Toyota’s profitability,” the credit-rating agency said.
S&P said Toyota’s earnings “are expected to deteriorate” in the year through next March but “should remain strong,” in light of the company’s high profitability backed by its cost competitiveness and ability to develop new products.
In its consolidated earnings report, Toyota said it posted an operating profit of 340.77 billion yen, down 13.2 percent, and a pretax profit of 371.28 billion yen, down 12.1 percent.
The company attributed these falls to the yen’s appreciation against the dollar, increased incentive payments to U.S. car dealers and changes to its model lineup.
Group sales, however, rose 5.6 percent to 4.092 trillion yen as vehicles sales remained robust both in Japan and abroad.