Toyota slashes outlook as global crisis bites

NAGOYA, Japan – Toyota Motor was set to slash its annual outlook yesterday to a consolidated operating loss of ¥150 billion (US$1,67 billion). This is its first such loss, the Nikkei business daily reported.

The profit warning would be the second in less than seven weeks, as Toyota suffers from a relentless global slide in car sales and a crippling rise in the yen.
A revision in some form at the world’s biggest car maker had been flagged by some Japanese media last week, after domestic rival Honda Motor also took the rare step of altering its guidance outside the usual quarterly reporting season.
Vehicle makers around the world are facing their toughest business environment in recent memory, caught in a sudden reversal of demand as the US financial crisis spread globally, squeezing credit and consumer sentiment.
Toyota, one of the fastest-growing major car makers until last year, has been particularly vulnerable after it rushed to add production capacity that quickly became redundant.
Toyota has idled factories, slowed assembly lines and delayed manufacturing projects, such as the start of a new Mississippi plant under construction to build the Prius hybrid model.
In early November, Toyota had cut its group operating profit forecast by ¥1 trillion to ¥600 billion for the year to March 31, after posting a first-half profit of ¥582 billion. It made a profit of ¥2,27 trillion last year.
Analyst forecasts on Reuters Estimates ranged from a loss of ¥150 billion at the low end, to a profit of ¥800 billion for figures not updated since conditions deteriorated in the past month.
Honda made a similar move last week, cutting its annual profit forecast by 67 per cent, and outlined a list of counter-measures such as putting off non-urgent investments to prop up its profitability.
In the United States, car makers are in even bigger trouble, with President George W Bush throwing General Motors and Chrysler a lifeline of up to $17,4 billion to stave off bankruptcy.- Nampa-Reuters