Toyota Motor Corp. said Thursday it expects to return to a net profit during the current business year on the back of aggressive cost-cutting efforts and brisk demand for hybrids even as it faces massive recalls worldwide.
In its third upward revision for the year through March 31, Toyota now anticipates a group net profit of ¥80 billion, up from an earlier projected loss of ¥200 billion. Last year it logged a ¥437 billion loss.
The automaker saw demand grow in emerging markets such as China and India, while sales of its hybrid models, including the Prius, have been strong due to government stimulus measures carried out worldwide.
Toyota, which has Daihatsu Motor Co. and Hino Motors Ltd. under its wing, also raised its global sales target for fiscal 2009 to 7.18 million units, up from an earlier forecast of 7.03 million units.
But analysts warn the automaker’s outlook is grim as it grapples with the fallout from massive recalls involving accelerator pedals as well as with complaints over the brakes of its best-selling new Prius hybrid that have surfaced in the United States and at home.
Senior Managing Director Takahiko Ijichi said the current full-year forecasts take into account the anticipated costs from recalls over faulty gas pedals and floor mats but do not include costs that may arise from the Prius brake troubles.
He said the company estimates quality management costs at ¥100 billion and sales-linked costs at 70 billion to ¥80 billion. Sales centering in Europe and North America are expected to decline by around 100,000 units.
“We would like to respond quickly and appropriately to stem our sales decline from expanding,” Ijichi said while denying that drastic cost-cutting efforts took away from quality control measures.
For the full year, Toyota sharply trimmed its operating loss forecast to ¥20 billion, from an earlier-projected loss of ¥350 billion, on sales of ¥18.5 trillion, against ¥18 trillion forecast in November and down 9.9 percent from a year earlier.
For the October-December period, Toyota saw an operating profit of ¥189.1 billion and a net profit of ¥153.2 billion.
Problems over Prius brakes came to light amid a safety recall of some 5.55 million vehicles in the United States and Canada over sudden acceleration troubles, some caused by loose floor mats, which first emerged last September.
A more recent recall in January over faulty accelerator pedals, involving the popular Camry and Corolla models, has quickly spilled over from North America to Europe, China, Latin America and other parts of the world.
“For Toyota, hybrids are their rising star,” said Tatsuya Mizuno, a former auto analyst at Fitch Ratings in Tokyo and current representative of consulting firm Mizuno Credit Advisory. “The problems could get far bigger if the recall issue hits home.”
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