Toyota's profits falling

[91z4me]

Toyota profit falls on weak U.S. sales

Automaker's quarterly net falls 28%, hit by lagging North American sales and stronger yen.

TOKYO (AP) -- Toyota said the strong yen and weaker U.S. sales took a bite out of January-March earnings and projected worse was to come - a 27% plunge in its full-year profit.

It would be the first drop in full-year profit in seven years for the automaker.

The results and outlook released Thursday highlight how the tough North American auto market is hammering profits. Meanwhile, unfavorable currency swings added to a growing list of problems for Toyota Motor Corp., including soaring material and energy costs and a stagnant auto market in its home market of Japan.

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

Still, the company appeared to be faring better than its American rivals. GM lost $3.3 billion in the first quarter. Ford (F, Fortune 500) had a surprise profit of $100 million for the same period but expects to lose money this year as the U.S. auto market deteriorates.

Honda Motor Co. (HMC), Japan's No. 2 automaker behind Toyota, said last month that its January-March profit declined 86% compared with the same period a year ago because of a corporate tax levied on its Chinese joint venture. Nissan Motor Co. (NSANY) reports earnings next week.

For the fiscal fourth quarter, the automaker reported a 28% drop in net profit to $3.05 billion. It was the first decline in quarterly profit since April-June 2005.

Sales rose 3.8% in the most recent quarter to $63.14 billion.

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.

For the fiscal year ended March 31, Toyota racked up record profit of $16.54 billion - up 4.5% from the previous year. That was in line with the projection Toyota gave in February.

Annual sales grew 9.8% to $252.8 billion, also a record for the company.

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

"We are facing a severe business environment," President Katsuaki Watanabe said. "Toyota considers this headwind as a valuable opportunity to turn it into a more flexible and stronger company."

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

The last time the company's profit declined was in the fiscal year ending March 2002; the last time annual sales fell was in the year ending March 2000, mainly because of a weak dollar.

Toyota - the world's second-biggest automaker after General Motors Corp. (GM, Fortune 500) - also warned it will need to spend more in technology research and carry out cost cuts to stay competitive.

The recent shift to smaller cars is a crunch for the makers because those vehicles are cheaper and have smaller profit margins than trucks and other gas guzzlers.

Toyota has been steadily boosting sales in recent years at a pace some analysts say is on track to overtake General Motors as the world's No. 1 automaker in annual vehicle sales.

For the fiscal year ended March 31, Toyota sold 8.91 million vehicles around the world. That was slightly below the 8.93 million vehicles it had expected to sell for the fiscal year, but still 4.5% better than a year earlier.

North American vehicle sales, which had been strong for Toyota in the past, fell for the last fiscal quarters, according to the company. Japanese sales have also been stagnant recently.

Toyota said it expected to sell 9.06 million vehicles globally for the fiscal year through March 2009, up 1.6 from the year just ended.

Toyota shares slid 1.8% to $52.7 in Tokyo. The results were released just as the market closed. To top of page

Perhaps there was some truth to the 'currency manipulation' speculation that has been going on for a while.

[Guest aatbloke]

Perhaps there was some truth to the 'currency manipulation' speculation that has been going on for a while.

Highly unlikely. The USD is has been depreciating against all major world currencies now for some five years - it's becoming as wise to invest in as Turkish Lira.

[IfICouldWouldYou?]

However, will they manage.............? The horror of it all. Now they only make as much money as most South American countries.

[91z4me]

Perhaps there was some truth to the 'currency manipulation' speculation that has been going on for a while.

Highly unlikely. The USD is has been depreciating against all major world currencies now for some five years - it's becoming as wise to invest in as Turkish Lira.

No the manipulation was the Yen was kept artificially low to the dollar to help exporting to the US be extra profitable.

[Guest aatbloke]

No the manipulation was the Yen was kept artificially low to the dollar to help exporting to the US be extra profitable.

Really? By whom? Between which dates? How was the actually achieved? Were investors deliberately hoodwinked? If so by whom? And how? How much money was flowing between the culprits to manipulate the rate? On which forex exchanges? Given that most f the world's forex transactions go through London, who was responsible? Another Nick Leeson type character?

Then again, it's common knowledge that the USD has been in freefall against virtually every major currency for a number of years now.

[91z4me]

Really? By whom? Between which dates? How was the actually achieved? Were investors deliberately hoodwinked? If so by whom? And how? How much money was flowing between the culprits to manipulate the rate? On which forex exchanges? Given that most f the world's forex transactions go through London, who was responsible? Another Nick Leeson type character?

Then again, it's common knowledge that the USD has been in freefall against virtually every major currency for a number of years now.

Let me clarify this for you

Perhaps there was some truth to the 'currency manipulation' speculation that has been going on for a while.

I was repeated the speculation that the Yen was kept artificially low to the dollar to help exporting to the US be extra profitable. Since, despite you knowing everything, you didn't know about that.

[DBeaSSt]

Honda Motor Co. (HMC), Japan's No. 2 automaker behind Toyota, said last month that its January-March profit declined 86% compared with the same period a year ago because of a corporate tax levied on its Chinese joint venture..........

That's a scary number, 86%! Haven't heard anything from GM on this 'corporate tax'. Wonder if it's going to hit them and others too...

[Guest aatbloke]

Let me clarify this for you

I was repeated the speculation that the Yen was kept artificially low to the dollar to help exporting to the US be extra profitable. Since, despite you knowing everything, you didn't know about that.

It isn't a case of knowing everything, but the rational reason is the one that's glaring us all in the face: the USD has slipped against virtaully every other major currency by a huge margin over the past five years. To be honest with you, I'd rather deal with facts than mere speculation.

[Polish_Kris]

Let me clarify this for you

I was repeated the speculation that the Yen was kept artificially low to the dollar to help exporting to the US be extra profitable. Since, despite you knowing everything, you didn't know about that.

Where's your source for this "the whole evil-world vs. poor, innocent America" conspiracy theory?

[CARBIZ]

Oh, please, why else would China and Japan buy up more than a trillion dollars in US Treasury bills, if not to keep their currency artificially lower? You don't see the Canadian government rushing out to flood the market with $C to drop its value, do you?

[VenSeattle]

I don't understand the reference to "speculation." Yen manipulation is well documented with several reputable publications discussing it. Just google it. The question is whether or not it's legal. From the looks of it - yes, what they're doing and how they're doing it is legal.

[pow]

That's a scary number, 86%! Haven't heard anything from GM on this 'corporate tax'. Wonder if it's going to hit them and others too...

AFAIK, it's a corporate tax levied by the Japanese government for underestimating the profits HMC made from their Chinese subsidiaries and affiliates.

[traumadog]

Oh, please, why else would China and Japan buy up more than a trillion dollars in US Treasury bills, if not to keep their currency artificially lower? You don't see the Canadian government rushing out to flood the market with $C to drop its value, do you?

Technically, only Japan uses the open market (buying T-bills) for currency manipulation, as China actually "pegs" the value of the yuan to the dollar (and only recently has let it "float" in a very tightly controlled range)