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Toyota reports worst annual loss in company history

 

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Updated Fri. May. 8 2009 7:55 AM ET

 

CTV.ca News Staff

 

Toyota Motor Corp. has seen some bad years since its founding in 1937, but none as bad as this one. The automaker reported Friday that it lost US$7.7 billion (765.8 billion yen) in the January-March quarter.

 

The quarterly loss -- down from a profit of $3.19 billion (316.8 billion yen) a year ago -- was even bigger than the $6 billion reported by beleaguered American car maker General Motors earlier this week.

 

Toyota is also warning that because of the global auto slump, its loss for the full fiscal year will be a bigger-than-expected $4.42 billion (436.94 billion yen) -- its worst result ever.

 

The quarterly loss was bigger than the full-year loss because it had some positive quarters earlier in the fiscal year.

 

President Katsuaki Watanabe said the devastating results were caused by three factors: "the significant deterioration in vehicle sales particularly in the U.S. and Europe"; the strong yen; and the rising cost of raw materials.

 

The huge loss came as a bit of a shock for the recently-crowned world's biggest automaker. Toyota's sales were booming throughout much of last year, thanks to its reputation for quality and good mileage. The Camry sedan and Prius hybrid have also been wildly popular.

 

But Toyota's business has been hit hard by the global credit crunch, which has caused people to hold off on buying new cars and forced the automaker to slam the brakes on expansion to deal with its new problem: overcapacity.

 

"The financial crisis, which began with the U.S. subprime problem, has in the latter half of the fiscal year become more and more severe," Toyota Motor Corp CEO Katsuaki Watanabe told reporters on Friday.

 

"And the economic crisis spread not only to Europe but also to resource producing nations and developing nations and the automobile industry saw a global contraction. As a result our cars sales all over the world, starting with the United States, fell."

 

Toyota's vehicle sales for the fiscal year ended March 31 fell 15.1 per cent to 7.57 million vehicles from 8.91 million vehicles the previous year. It expects to sell even fewer vehicles in the fiscal year through March 2010 -- 6.5 million vehicles.

 

"While there are some signs in some countries such as China and India of a recovery, Europe and United States still need time to recover economically and normalize their financial markets, and therefore we are preparing ourselves for the foreseeable future for difficult times ahead," Watanabe added.

 

To cut costs, Toyota has been slashing managerial pay and offering buyouts to thousands of American workers. It has reduced the number of temporary workers in Japan from 9,200 last year to 3,000.

 

Watanabe promised more cost reduction and a focus on hybrids and compact vehicles to boost profitability.

 

Nevertheless, the manufacturer is expecting its operating loss -- reflecting its core automaking business -- to worsen to 850 billion yen for the year through March 2010 from 461 billion yen this past year.

 

"It appears to take some more time before the financial markets in the U.S. and Europe normalize and the global economy recovers," Watanabe said.

 

http://www.ctv.ca/servlet/ArticleNews/story/CTVNews/20090508/Toyota_loss_090508/20090508?hub=World

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