Japanese automaker Toyota posts surprise profit
Filed under: Company News, Earnings, Costco Wholesale Corp., Toyota
Toyota Motor Corp's (TM) surprise quarterly profit and halving of its annual loss forecast failed to convince investors the world's No.1 carmaker is back on track, as government subsidies peter out and a strong yen takes its toll.Major Japanese automakers have raised their forecasts for the year to March 2010 as they squeeze out savings and government incentives from Germany to China, the U.S. and Japan prop demand through the worst economic crisis in generations.
But with such stimulus programs beginning to run out, Toyota is looking to eliminate more spending, announcing its exit from Formula One racing on Wednesday to put that annual budget of around $300 million to better use.
"The biggest challenge for Toyota now is cutting overheads," said Koji Endo, a senior analyst at Advanced Research Japan in Tokyo.
"The company has not been able to respond to a sudden plunge in revenue with speedy cost reductions."
Toyota, until two years ago the world's most profitable automaker, is expecting the biggest loss among its domestic peers this year, weighed down by severe overcapacity after adding new factories during its boom years before the financial crisis hit.
While Toyota said it expects an additional 350 billion yen ($3.9 billion) in emergency cost savings than what it had planned three months ago, investors were unimpressed by its revised outlook, especially after the consensus-beating forecasts from rivals Honda Motor Co and Nissan Motor Co.
Toyota expects an operating loss of 350 billion yen for the year to March, smaller than the 750 billion yen previously forecast but bigger than the 293 billion yen consensus from Thomson Reuters I/B/E/S.
"It seems too large," Koichi Ogawa, chief portfolio manager at Daiwa SB Investments. "Toyota looks a little less attractive than other companies such as Honda and Nissan," he said, adding the market may find the news disappointing.
Toyota shares ended down 0.8 percent before the results, having risen 23 percent this year. Nissan has more than doubled, while Honda is up by almost half over the same period.
Q2 BEATS FORECASTS Toyota narrowed its annual net loss forecast to 200 billion yen from 450 billion yen, as it lifted its group-based global vehicle sales forecast by 6.5 percent to 7.03 million units.
For the July-September quarter, the maker of the Prius hybrid car reported an operating profit of 58.0 billion yen, down 66 percent from a year earlier but beating an average estimate of a loss of 63 billion yen from five analysts.
Toyota said the overshoot mainly came from improved used cars prices in the United States. Without such finance-related gains, it would have stayed in the red, an executive said.
Second-quarter net profit fell 84 percent to 21.84 billion yen, while revenue dropped 24 percent to 4.54 trillion yen.
Struggling U.S. rival Ford Motor Co also reported a quarterly profit this week, defying Wall Street estimates as it seized market share from General Motors Co and Chrysler.
But the yen's strength remains Toyota's Achilles heel as it exports more than half of its vehicles built in Japan.
"There's not much we can do to battle the stronger yen apart from continuing with our cost reductions," Executive Vice President Yukitoshi Funo told reporters.
WORK ON CHINA The second-quarter earnings mark a huge improvement from the previous quarter's 194.9 billion yen loss, as Toyota gradually ramped up production in Japan, where demand for its Prius and other hybrid cars has shot up thanks to generous tax incentives.
But with sales in the key U.S. market still far below their peak, Toyota is aiming to boost manufacturing efficiencies to be able to break even using just 70 percent of its parent-only output capacity.
Analysts expect capacity utilization to improve as Toyota exits a 400,000 units-a-year factory in California that it had held jointly with GM.
On Wednesday, Japanese rival Nissan revised its annual outlook to a profit from a loss as soaring sales in China helped it grab a bigger slice of the fast-growing market.
While red-hot demand in China has been a boon for all brands, Toyota's sales growth there has lagged the overall market's due to a dearth of smaller models that qualify for Beijing's tax incentives introduced this year.
To better cater to local demand, Toyota is looking to beef up its research and development functions in China.
The Nikkei business daily reported on Thursday that Toyota planned to spend 30-40 billion yen ($330-$440 million) to build an R&D center in China as early as next year. Toyota said it had not made any decision, although it has been considering various options in view of local consumer and government needs.
Additional reporting by Rie Ishiguro, Elaine Lies and Taiga Uranaka; Editing by Chris Gallagher and Lincoln Feast
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Reader Comments (Page 1 of 2)
11-05-2009 @ 8:28AM
krazyman12345 said...
All Ican say is Americans need to buy local and America made when you can to keep our jobs and keep the USA strong,because Obama the great and his jerk offs aren't going to do it
Reply
11-05-2009 @ 8:38AM
crazyman12345 said...
Don't run my American flag on your foreign car
Reply
11-05-2009 @ 2:44PM
Fletch said...
Thank you Billy Clinton and Al "the whore" Gore for N.A.F.T.A. and G.A.T.T. You two should be arrested and tried for tyranny. You opened the gates to the N.A.U. Bush crimes and Obama crimes. Why didn't you two just hand over the country to Rockefeller and Rothschild while you had the chance!
Watch this video from 1992 to hear the truth. It is grainy but the audio tells the truth. http://video.google.com/videoplay?docid=-6642758020554799808&ei=kTzySr_2CZ7cqAKS_Y2yAg&q=world+wilderness&view=2#
11-05-2009 @ 8:52AM
Judi said...
IT IS A FACT, BAMMYS CAR GIVEAWAY HELPED FORIEGN CARS NOT AMERICAN. WAY TO GO, DEMOCRAPS, BOOROWED THE MONEY TO GIVE TO OTHER COUNTRIES. WE HAVE TO GET THESE NUTS OUT OF OFFIICE. CALL AND E-MAIL CONGRESS TODAY SAY NO TO GOVERNMENT, SOCIALIST, CZAR CONTROL, LIMITED, RATIONED HEALTH CARE.
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11-05-2009 @ 8:56AM
Chuck said...
Remember Toyota is not the great vehicle manufacture that all the publications say they are. Floor mats, rust, and engine sludge has been some of their problems over the last years. Toyota is at the point that the big three were in the late 70's. They are putting out vehicles in numbers that exceed their production plans and now it is starting to show.
Remember buy "AMERICAN". We need the jobs!
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11-05-2009 @ 9:18AM
dang1067 said...
Bottom line is, Toyota, Nissan, and Honda are NUMBER-ONE!!!! Ford, GM and Chrysler are GARBAGE!!!!
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11-05-2009 @ 10:01AM
gleeminghope said...
Only a traitor would say that. Didn't you see the news yesterday about Toyota's? They claim that they havd SERIOUS problems with their acceleration. IT is not the floor mats. It is the computer that sends the car racing up to 100 mph killing many people. They are also going to try and open up 300 closed lawsuits because they just received information that Toyota destroyed their crash test studies on purpose and many people were killed in rollover accidents involving Toyota's.
Anyone who drives a foreign car should have their head examined. We are in a global economy war and America is fighting for her life. Toyota exports over half of their vehicles. In August of 2009, only 192 Fords and 63 Chevrolets were sold in Japan. In 2008, Chevrolet sold one vehile in Japan for every 1,300 Toyota's sold in the United States. Ford sold about 2,500 vehicles in Korea last year, compared to nearly 330,000 Hyundai and Kia vehicles imported to the United States.
While Korea and Japan no longer directly restrict U.S. Imports, they do put up huge barriers to them. They make it almost impossible to sell cars in their countries. They have literally closed the doors..we gave Japan over 80% of our hard earned tax dollars with our failed cash 4 clunkers program and when Japan had a similar program afterwards, they banned American cars from their program.
Imagine the Philles annihilating the New York Yankees 4,000 to 3 in the final game of the World Series and you will have something like the U.S. Automakers success rate into breaking into the Japanese and Korean Markets.
We are facing global over capacity in the world. And everyone is fighting for their lives..Germany, France, United States, Japan..
America is fighting for her life and her jobs and her economy and we need to win this war.
BUY AMERICAN and help American workers keep their jobs..this has a huge ripple effect throughout the economy, it includes auto workers, parts suppliers, local restaurants, bank tellers, dentists, policeman, teachers, fireman jobs...it affects each and everyone one of us.
11-05-2009 @ 9:37AM
Henry said...
To dang1067: I had a Toyota. Piece of junk. Engine blew up, clutch was slipping, electricial problems, body rot and hard to work on. I prefer Fords any day. No stimulis.
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11-05-2009 @ 10:01AM
Greg-san said...
Ford you say? Who do you think helped developed the platforms??? Mazda and Volvo engineers!! Last I heard Mazda is Japanese and no Ford never own them, just had 34% stock just so Ford can get help from the Japanese.
Toyota is the WORLD'S best selling car NOT Ford. I love it when the commercials say America's best selling car.
The little three WILL NEVER surpass the Asians in the automotive business. Toyota is a world class automotive company and YES since I like them I must move to Japan right?
I am here in Nagoya, the World's headquarters.
We already have the FIRST Hybrid and we are now working on something that the little three are afraid to touch..it is called taking on a challenge when everyone is afraid to make that leap.
Great job Toyota ..sake and noodles on me my comrades!!!!!!!!!
We are the World's best automotive company don't let these uneducated people tell you otherwise.
Greg-san
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11-05-2009 @ 10:24AM
jim said...
Sorry greg-san but the only uneducated Americans are buying imports!! We will win back this title of #1 once we get the whole truth out! Americans are seeing through all the B.S the imports have gave us(Paid off politicians$/unfair trade deficits/etc.) All parties(Reps/Dems/Indys are coming around and see that American cars are as good and better in some cases and actually help This Country Out!!! Baseball/Apple pie and Chevrolet to my comrades!!!!
11-05-2009 @ 10:47AM
gleeminghope said...
Explain the acceleration problem to me. I saw it on the news yesterday. Toyota is trying to cover it up...they claim it is a computer chip problem, not a floor mat problem. Did you see the video which killed 4 people at an intersection..people were screaming on the cell phone in their call to 911...their last words were "pray for us"...and they all died. Thanks, but no thanks Toyota. Known as the "run away cars"...google this..
Also, what about Toyota May be forced to reopen rollover crash cases in which Biller, a past employee alleges that Toyota destroyed electronic docoments and crash test evidence relevant in more than three hundred suits regarding sport uitility vehicle rollover accidents.
You wouldn't catch me in a Toyota. They are death traps according to our news..
11-05-2009 @ 11:47AM
whamhammer said...
So how are those defective e.c.m.'s in the RAV4's , Corollas and Matrix working for you???? I worked for Toyota untill I recently moved. Toyota has quite a few problems with thier cars (and many of them have VIN numb ers starting with "J"'s ) , they arent as good as they used to be, when they were built with simplicity in mind.
11-05-2009 @ 10:37AM
jim said...
Please read Gleeminghopes post for the truth of the matter. We are fighting a war of economics with the asian countries and if we lose it will be end of the U.S as you know it! The U.S has got to where it is because of its own power( Industry/people/beliefs)and did so in a short time!! Lets keep it strong!!!
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11-05-2009 @ 10:44AM
Henry said...
Greg-san: You may say Toyota is the best selling car. The No.1 selling truck is the Ford F-150. The best small truck is the Ford Ranger. The Ranger is easy to work on. I look at a Nisson and I didn't like the vehicle. I own a Ranger and I like it. For foreign vehicles, I prefer German cars. The Germans were into fuel-injected engines during the war and after. I saw a 1953 Mercedes Gulf Wing and it had one of the most advance fuel-injected systems ever made.
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11-05-2009 @ 11:00AM
brad said...
Show me an American car that's All American and I'll buy it. There's as many foreign factories in the U S as their is so called American. They ceate jobs for blue collar workers, so they raise their families by having a job. The stock holders are the ones that make the money, so why do I care wich big shot gets rich. We need jobs not rich stock holders, Iv'e got a ford tauras & nissan pick-up & the nissan was made in Tennessee except for the engine. Bring the so called American Factories back to the US, then we'll talk
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11-05-2009 @ 11:31AM
gleeminghope said...
First of all, you are wrong, we don't have the same amount of
"assembly plants". Just another excuse...my friend.
By most measures, Detroit automakers come out ahead as far as domestic-parts content. Among the 58 models with ratings of 75 percent or higher, foreign based automakers produce just eight.
Conversely, Detroit automakers produce just 24 of the 140 models with domestic content ratings of 10 percent or less.
Although Toyota Sienna with a domestic content rating of 85 maybe high, it is hard to deny that the highest domestic content comes from Detroit. Of the 35 most popular US built 2008 and 2009 models, 43 percent of GM, Ford and Chrysler contenders had domestic content ratings of 75 percent or higher. In comparison, just 25 percent of the Nissan, Honda, Hyundai and Toyota models on the list achieved that.
Secondly, we just are given the grunt assembly line jobs which pay only $14 an hour while the foreign car companies keep the engineering, design, marketing, accounting, finance, jobs..and the highly skilled big money making jobs. The Big 3 have historically recruited very heavily from our universities for these jobs..not today...if you want you children graduating from college to work on assembly lines, OK, but not me. I want the engineering, accounting, finance, etc..jobs here for my
children. These jobs need to state in the United States. We want engineers here..not there..
---- In the future, you can use this information to comment on the site:
Username: gleeminghope@aol.com
11-05-2009 @ 11:51AM
DMX said...
Hey-hey... we pray possum; foo you! BONSAI !
Reply
11-05-2009 @ 1:29PM
steve said...
I am a GM auto worker who is currently laid off due to the economic problems of the USA. Its a shame our reputation is shot because of the loans we recieved by our government. How can we compete with the foreign markets when our governments are so different. They dont pay for their health care even in the USA. We have the burden of health care and retirement to deal with so how do you compete with that. They come here and set up shop down south where the cost of living is cheaper so people think because they make cars here they arnt hurting anything. Well it only cost them two grand to build a car here when the rest goes back over seas. People need to realize the effect of buying a foreign car has on all of us. We build the best cars and trucks right here in the USA and it is up to us to keep these companies alive. Trust that we are doing everything in our power to put out the best products in the world and stop listening to the media bull about how bad we are. I am a proud american who is very upset how the American people turned their backs on us just because the economy took a dive. The only way we can repay the Government back is to sell cars and trucks and if nobody buys them then we will eventually go down. I am eager to get back to work and when I do the first thing I am going to do is buy a new GM car because they are the best cars in the world.
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11-05-2009 @ 1:31PM
cindy said...
My husband retired from GM about 15 years a go... He totally agrees with you...U.S ppl buys the forigen cars, not realising they are hurting their own country . GO U.S. Autos.. keep the money here at home not in other countries.
11-05-2009 @ 2:01PM
Gere said...
If we indeed do create new auto jobs how about moving them out of the rust belt and among the rural states and southwest areas of the country. The upper Midwest and North Eastern sections of this country are getting most of the the benefits from these stimulus packages. The fact is that wages in these areas have always been significantly higher than those normally found in the areas I suggest moving these facilities to. If we are seriously thinking of investing any new taxpayer backed development funds into thi seconomy, then at least do so in the areas that have been historically been dneglected for decades. And if we are going to try and save money then do so inside the country where lower wage rates can economically compete with the foreign manufactured imports. And this time, don't forget to set some sort of guidelines that stipulates that the parts, materials and labor are based in side this country, no matter what. Lets try and target our economy for a change instead of propping up Japans. We already pay for the bulk of their national defense as it is, and they owe us in my opinion.
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