Toyota on Thursday warned of a 64 percent drop in full-year net profit and reported a slump in quarterly earnings, as the coronavirus pandemic shreds the global auto market.
Japan’s top car maker, which had previously declined to give a bottom-line forecast because of ongoing uncertainty, now projects a net profit of ¥730 billion ($6.9 billion) for the fiscal year ending next March, down from ¥2.07 trillion the previous year.
Its forecast for annual operating profit remained unchanged at ¥500 billion, down nearly 80 percent from the previous year.
“The impact of COVID-19 is wide-ranging, significant and serious, and it is expected that weakness will continue for the time being,” Toyota said in a statement.
Toyota issued the latest warning as it reported a 74.3 percent plunge in net profit for the three months to June, with quarterly revenue down more than 40 percent.
Carmakers around the world have been battered, with many relying on government help, as the pandemic slams the global economy into reverse and forces people to stay at home.
General Motors fell into the red in the second quarter with a $758 million loss, reversing a quarterly net profit logged a year ago.
Among other major automakers, Honda Motor Co. and Nissan Motor Co. plunged into the red in the three months to June, underscoring the severe blows dealt by the pandemic. For the full year, Honda is projecting a sharp drop in net profit, with Nissan expecting another year of red ink from the double whammy of the virus and a reform of its entire business after the arrest of former boss Carlos Ghosn.
Toyota said the pandemic and the response to the virus had “adversely affected” the firm “in a number of ways.”
It cited falling demand, as well as the temporary suspension of production at plants in Japan and overseas and hits to Toyota dealers, distributors and third-party suppliers.
“The duration of the global spread of COVID-19 and the resulting future effects are uncertain,” Toyota warned, adding it was “difficult to predict” the final impact of the virus on its business.
In the meantime, Toyota revised its fiscal 2020 estimate for global vehicle sales upward to 9.1 million units from 8.9 million units.
Its global sales are believed to have bottomed out in April, with sport utility vehicles now selling well in the United States and China, according to company officials.
Global auto demand is “recovering faster than initially expected,” a Tokyo public relations official said.
During its annual shareholders meeting in June, Chief Executive Officer Akio Toyoda said the company will remain profitable during the coronavirus pandemic, using lessons it learned during the global financial crisis more than a decade ago.
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