Toyota sees first annual net loss since 1950

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(Agencies)
Updated: 2009-02-06 16:10

TOKYO - Toyota sank into the red for the October-December quarter and acknowledged Friday it was heading for its first annual net loss since 1950 because of plunging global automobile sales and the strong yen.

The logo of Toyota Motor Corp is seen at the company's showroom in Tokyo February 6, 2009. Toyota Motor Corp said it expected its full-year loss would be three times what it had flagged just six weeks ago as the world's biggest automaker struggles to cut production fast enough to match sliding sales. [Agencies]

Joining a string of Japanese companies that have slashed forecasts, Toyota Motor Corp. said it expects a net loss of 350 billion yen ($3.9 billion) for the year through March.

That's a stunning reversal from the record 1.72 trillion yen profit the maker of the Prius hybrid and Lexus luxury car posted the previous fiscal year. In December, Toyota thought it would eke out a small net profit, but the outlook has darkened further since then, especially amid a dramatic contraction in the US auto market.

For the fiscal third quarter, Toyota racked up a 164.7 billion yen loss, down sharply from the 458.6 billion yen profit it had the same period the previous year, as the global slump squelched sales.

Quarterly sales plunged 28.4 percent to 4.8 trillion yen.

The last time Toyota, which last year overtook General Motors Corp. to become the world's best-selling auto company, had an annual net loss was in 1950 when it reported only parent results. Since it began reporting group results in 1998, under US accounting standards, it has never reported red ink.

Global vehicle sales for the quarter shrank by 443,000 vehicles from the same period a year earlier to 1.84 million, as sales dropped throughout the world, including North America, Europe, Japan and other Asian nations, it said.

"Both revenues and profits declined severely during this period," Toyota Executive Vice President Mitsuo Kinoshita said of the latest quarter.

Conditions were especially tough in the US and Europe, and the rapid rise of the yen, which reduces the value of overseas earnings, also hurt results, he said.

Toyota also lowered its global vehicles sales forecast by 220,000 vehicles from its December forecast to 7.32 million vehicles.

Kinoshita promised that the company will turn itself around through cost cuts and reshaping its business by coming up new products to meet global demand. He said Toyota continues to be committed to developing gas-electric hybrids as a pillar of its growth strategy.

He pointed to the third-generation Prius, set to arrive at dealerships in May, as well as the HS250h, the first Lexus model designed solely as a hybrid, scheduled for sale midyear, as models symbolizing Toyota's future.