Toyota slashes earning forecast

Toyota Motor Corp. has slashed its annual earnings forecasts by more than 50 percent because of production disruptions caused by flooding in Thailand and the persistent strength of the yen. The Japanese automaker now expects net income of 180 billion yen, or $2.3 billion, for the year begun on April 1. That''s less than half the 408 billion yen, or $4.7 billion, that Toyota earned last year. It''s also less than half the profit that Toyota forecast in August for this year, reported Detroit News newspaper on Sunday. Toyota also cut its operating income projection by more than half, to 200 billion yen, or $2.6 billion, for this year. Analysts were disappointed by the steep downward revisions, said the newspaper. "Toyota''s new estimate is at the low end of analyst forecasts and thus leaves an extremely negative impression," Noriyuki Matsushima, a Tokyo-based analyst for Citi Investment Research & Analysis, said in a note to investors. The automaker, once the world''s richest by far, has been struggling since 2008, first with the industry downturn, then with massive safety recalls and this year with natural disasters. Toyota was just recovering from the devastation wreaked by a record quake and tsunami in March when floods in Thailand caused new disruptions in output and parts deliveries. Forecasters expect Toyota, the world''s biggest carmaker since 2008, to fall to second or even third place behind General Motors Co. and Volkswagen AG in global sales, said Detroit News. The Japanese automaker trimmed its global sales forecast to 7.38 million vehicles from an earlier projection of 7.6 million. The Thai floods have resulted in lost production of 230,000 vehicles, but Toyota expects output to be at normal levels by year''s end. The automaker continues to struggle, however, with an enormous financial challenge the yen''s steep rise against other currencies. In the past year, it has appreciated to 78 to the dollar from 86, and it has strengthened even more against the euro, slashing profitability of Toyota''s Japanese production operations. Toyota is under political pressure to maintain annual output of 3 million vehicles in Japan. Currently, about 1.3 million of those vehicles are sold domestically and 1.7 million are exported. Toyota will continue to produce 3 million vehicles a year in Japan but is taking measures to reduce the impact of a strong yen, said Takahiko Ijichi, a senior managing officer at Toyota. (QNA) M T Z