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Toyota Projects Lower Sales, Profit For Fiscal Year

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The Associated Press

Published: May 9, 2008

TOKYO - Battered by a slumping North American auto market and unfavorable currency swings, Toyota is forecasting a double barrel of bad news this fiscal year: its first year-on-year sales slide in nine years and first profit slip in seven years.

The list of problems is growing for Toyota, including soaring material and energy costs and a stagnant auto market in Japan, its home market. A weak dollar, now hovering at about 100 yen compared with nearly 120 yen last year, erodes the income of Japanese exporters like Toyota.
Toyota Motor Corp., the maker of the Prius gas-electric hybrid and Camry sedan, reported Thursday a 28 percent tanking in net profit for the January-March quarter to $3.05 billion - the first quarterly decline in profit since April-June 2005.

Sales rose 3.8 percent to $63.14 billion.

"There is no mistake that things are seriously tough - even for Toyota," said Tsuyoshi Mochimaru, auto analyst at Lehman Brothers in Tokyo.

Mochimaru warned the sales strides Toyota is making in China and other relatively new regions probably won't be enough to make up for the battering it's taking in the key North American market.

Like other major automakers, Toyota has been gradually switching its focus to emerging markets, but it still makes about a third of its sales in North America.

Still, Mochimaru noted Toyota tends to be conservative and is mapping out the worst possible scenario. And it could emerge with better results, as long as exchange rates stay stable, he said.

Toyota had been on a roll with the success of its fuel-efficient models, including the Prius and the Corolla subcompact, which have gotten a boost from rising gas prices.

But recent credit woes in North America have dampened sales in recent quarters.

For the fiscal year ended March 31, Toyota racked up record profit of $16.54 billion - an increase of 4.5 percent over the previous year. The number was in line with the projection Toyota gave in February.

Sales in the just-completed fiscal year grew 9.8 percent to $252.8 billion, a record for the company.

But Toyota projects this fiscal year's profit will tumble 27 percent to $12.0 billion, while annual sales are seen falling 4.9 percent to $240.4 billion.

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