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Dec. 22, 2008, 7:36 a.m. EST

Toyota on track for first-ever loss in fiscal 2009

Revises forecasts to an operating loss of $1.7 billion in year ending March 31

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By V. Phani Kumar and Chris Oliver, MarketWatch

HONG KONG (MarketWatch) -- Toyota Motor Corp. on Monday forecast an operating loss for the current year, the first in the automaker's history since the Second World War, blaming a slump in the global automobile market and a sharp appreciation in the Japanese yen against major currencies.

Toyota forecast a consolidated operating loss of 150 billion yen ($1.7 billion), for the fiscal year ending March 31, compared to a 2.27 trillion yen profit a year earlier. Toyota had forecast a 600 billion yen operating six weeks ago, which was revised down from its May forecast of 1.6 trillion yen.

"It's a kind of emergency that we've never experienced before," Toyota President Katsuaki Watanabe told reporters in Nagoya Monday. He added there were no convincing signs of recovery at hand. "It's not yet possible to tell where the market's bottom will be."

Toyota /zigman2/quotes/200537742/composite TM -0.49% /zigman2/quotes/203803129/delayed JP:7203 -3.48% on Monday also cut its net income, revenue and unit sales forecasts.

/zigman2/quotes/200537742/composite TM 130.75, -0.65, -0.49%
TM

"The conditions surrounding automobiles sales around the world are getting worse," said Credit Suisse's Tokyo-based analyst Koji Endo.

Endo said Honda Motor Co /zigman2/quotes/200490352/delayed JP:7267 -4.26% /zigman2/quotes/207173990/composite HMC -1.00% and Nissan Motor Co. /zigman2/quotes/207656007/delayed NSANY +1.90% /zigman2/quotes/208298710/delayed JP:7201 -1.42% were also likely to post operating losses in the second half, if not the full year, reflecting the difficult operating conditions faced by car makers across the board.

"It is very difficult to find a company that's actually making money." Endo said.

Toyota , he added, would likely report back-to-back annual operating losses through the fiscal year ending March 31, 2010 because of the likely continued appreciation of the Japanese currency and deteriorating economic conditions in the U.S. and Europe.

Toyota said the dismal forecasts came "in response to the unexpected degree of the slowdown in the automotive market, and the revision of the assumed exchange rates in response to further appreciation of the yen."

Toyota said it expects net income of 50 billion yen, down 91% from its earlier estimate of a 550 billion yen profit. It also lowered its full-year unit group sales forecast, which includes sales of its affiliates such as Daihatsu and Hino Motors /zigman2/quotes/207652388/delayed HINOY +0.93% /zigman2/quotes/209422954/delayed JP:7205 -3.67% , to 7.54 million vehicles from its reduced estimate of 8.24 million vehicles in November.

Moody's said Monday it was reviewing Toyota's long-term debt rating for a possible downgrade following the carmaker's revised estimate.

/zigman2/quotes/203803129/delayed 7203 7,127.00, -257.00, -3.48%
JP:7203

The latest sales forecast marks an 18% decline over the 8.9 million units it sold in the year ended March 31, 2008.

The company now expects U.S. sales of 2.17 million units -- 250,000 units lower than its previous projection -- while Japan sales are forecast to drop by an additional 70,000 units to 2.01 million.

Europe sales were expected to drop even more sharply, to 1.04 million units from 1.21 million forecast earlier.

Analysts said there's little to be optimistic about in the immediate future.

"It is difficult to envision any swift recovery from the present damage in the U.S., Toyota's core market, and we anticipate increasing cuts in overseas local production," wrote Barclays Capital analyst Tsuyoshi Mochimaru in a research note dated Dec. 19.

Mochimaru cut his price target on Toyota's Tokyo-listed shares to 2,600 yen from 3,550 yen. Toyota was likely to report an operating loss of 600 billion yen in the year to March 31, 2010, followed by "unexpectedly sluggish" recover the following year, he added.

Toyota's shares closed 0.2% lower at 2,895 yen in Tokyo Friday. The Nikkei 225 Average ended up 1.6% at 8,723.78.

Toyota has factored in a costlier yen for the fiscal second-half of the year started Oct.1, assuming an average exchange rate of 93 yen to the dollar and 123 yen to the euro.

In late Tokyo trade Monday, the dollar was quoted at 89.92 yen, while the euro fetched 126.23 yen.

/zigman2/quotes/200537742/composite
US : U.S.: NYSE
$ 130.75
-0.65 -0.49%
Volume: 367,932
Feb. 28, 2020 6:30p
P/E Ratio
8.24
Dividend Yield
2.73%
Market Cap
$184.83 billion
Rev. per Employee
$737,463
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/zigman2/quotes/203803129/delayed
JP : Japan: Tokyo
¥ 7,127.00
-257.00 -3.48%
Volume: 10.62M
Feb. 28, 2020 3:00p
P/E Ratio
8.24
Dividend Yield
3.09%
Market Cap
¥20149.10 billion
Rev. per Employee
¥81.43M
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/zigman2/quotes/200490352/delayed
JP : Japan: Tokyo
¥ 2,799.50
-124.50 -4.26%
Volume: 8.46M
Feb. 28, 2020 3:00p
P/E Ratio
10.42
Dividend Yield
4.00%
Market Cap
¥4890.48 billion
Rev. per Employee
¥73.06M
loading...
/zigman2/quotes/207173990/composite
US : U.S.: NYSE
$ 25.66
-0.26 -1.00%
Volume: 1.33M
Feb. 28, 2020 6:30p
P/E Ratio
10.37
Dividend Yield
3.39%
Market Cap
$44.83 billion
Rev. per Employee
$661,808
loading...
/zigman2/quotes/207656007/delayed
US : U.S.: OTC
$ 8.56
+0.16 +1.90%
Volume: 364,343
Feb. 28, 2020 3:59p
P/E Ratio
42.97
Dividend Yield
6.50%
Market Cap
$16.82 billion
Rev. per Employee
$773,563
loading...
/zigman2/quotes/208298710/delayed
JP : Japan: Tokyo
¥ 463.60
-6.70 -1.42%
Volume: 29.12M
Feb. 28, 2020 3:00p
P/E Ratio
43.48
Dividend Yield
2.16%
Market Cap
¥1814.13 billion
Rev. per Employee
¥85.36M
loading...
/zigman2/quotes/207652388/delayed
US : U.S.: OTC
$ 105.63
+0.97 +0.93%
Volume: 13.00
Feb. 28, 2020 5:20p
P/E Ratio
14.08
Dividend Yield
1.98%
Market Cap
$4.75 billion
Rev. per Employee
$545,250
loading...
/zigman2/quotes/209422954/delayed
JP : Japan: Tokyo
¥ 892.00
-34.00 -3.67%
Volume: 3.74M
Feb. 28, 2020 3:00p
P/E Ratio
10.90
Dividend Yield
2.91%
Market Cap
¥512.04 billion
Rev. per Employee
¥60.20M
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Varahabhotla Phani Kumar is a reporter in MarketWatch's Hong Kong bureau. Chris Oliver is MarketWatch's Asia bureau chief, based in Hong Kong.

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