Toyota Slashes Profit Forecast Again

Japan's No. 1 automaker said it expects a fiscal-year operating loss of 150 billion yen, its first ever.
Publish date:

Updated from 4:38 a.m. EST


(TM) - Get Report

, Japan's largest automaker, revised its earnings forecasts lower saying it expects net income for the fiscal year ending in March to total 50 billion yen ($555.8 million) compared with a previous forecast of 550 billion yen.

Toyota also said Monday it expects a fiscal-year operating loss of 150 billion yen compared with a previous operating profit forecast of 600 billion yen as global demand for cars slides and the yen rises against the dollar.

It would be the automaker's first operating loss ever for the fiscal year through March. The company began reporting operating figures in 1941.

Toyota earned 1.7 trillion yen earned the previous year.

"The change that has hit the world economy is of a critical scale that comes once in a hundred years," President Katsuaki Watanabe said at the company's Nagoya office. The drop in vehicle sales over the last month was "far faster, wider and deeper than expected."

Sinking sales in the U.S. in the wake of the financial crisis have dealt a heavy blow to Japanese automakers. But Watanabe said that emerging markets, which had held up in the beginning, were also slowing down now.

The surging yen, which erodes overseas earnings, has battered profits. The dollar has fallen to 13-year lows of about 90 yen recently.

This is the second time Toyota has reduced it annual earnings forecast this year. Initially, it had been projecting 1.25 trillion yen ($13.9 billion) in profit for the year through March 2009, but last month it reduced that to 550 billion yen before chopping it further Monday.

Toyota now expects to sell 8.96 million vehicles around the world this calendar year, down 4% from a year earlier. And unlike previous years, Watanabe gave no goal for 2009.

In July, Toyota lowered its global vehicle sales target for 2008 to 9.5 million from an initial 9.85 million. Last year, it sold 9.37 million vehicles around the world.

Toyota also lowered its sales forecast for the fiscal year through March to 21.5 trillion yen ($239 billion), down about 18% from its earlier projection at 23 trillion yen ($256 billion).

There were reports from Japanese media over the weekend that Toyota planned to slash its dividend but the company said nothing about that in a statement Monday.

Copyright 2008 Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. AP contributed to this report.