By YURI KAGEYAMA - AP Business Writer - Associated Press
Monday, November 2, 2009
Toyota Motor Corp., the world's top automaker, reports earnings for the fiscal second quarter on Thursday. The following is a summary of key developments and analyst opinion related to the period.
OVERVIEW: Toyota posted its worst ever loss in the financial year ended March, and is expecting the flow of red ink to continue this fiscal year. Adding to the automaker's crisis is an investigation into floor mats in its vehicles sold in the U.S., which are suspected of jamming the gas pedal and causing crashes. The problem is likely to affect 3.8 million vehicles, including its top-selling Camry. A recall could be costly, and it could also damage Toyota's pristine image for quality. Toyota has declined comment except to say it is fully cooperating with U.S. authorities in an ongoing investigation. On the bright side, Toyota is benefiting from strong sales in China and other emerging markets. Demand is surging for its Prius hybrid in Japan, thanks to tax breaks and government incentives.
BY THE NUMBERS: Toyota is expecting a 450 billion yen ($5 billion) loss for the fiscal year through March 2010, worse than the 350 billion yen ($3.9 billion) loss in the previous fiscal year. Like other Japanese exporters, Toyota is hurt by a strong yen. The dollar has recently hovered around 90 yen. Akio Toyoda, grandson of the company's founder who became president this year, has vowed to avoid a third straight year of red ink.
ANALYST TAKE: Toshiro Yoshinaga, analyst with Aizawa Securities Co. in Tokyo, warns Toyota will likely remain in the red for the fiscal year because of the global slump. But he credits Toyoda for bringing the ranks together for speedier decision-making, including a key push on electric vehicles. "Up to now, Toyota was a winner in gasoline engine cars. It was also a winner in advanced gasoline cars called hybrids," he said. "Now under Toyoda's policy, it can hope to be a winner in electric cars." Toyota is promising electric vehicles by 2012.
WHAT'S AHEAD: A big unknown hanging over Toyota is the U.S. investigation into faulty floor mats. Toyota is counting on its strength in hybrid technology, and recently introduced another hybrid-only model called Sai for the Japanese market. Besides pushing a green image, the company is also aggressively planning new sportscars, such as the super-expensive Lexus LFA and the more affordable Toyota FT-86. Such offerings underline Toyota's ambitions to become a global premium brand. Also critical are efforts to offset sluggish North American sales by grabbing market share in China and other growth markets.
STOCK PERFORMANCE: Toyota shares were down 2.5 percent at 3,570 yen Monday in Tokyo. They slipped to 2,000 yen ($22) levels earlier this year but have since gradually recovered.