Business NEWS

Toyota Motor back to making profit in latest quarter

By Amarendra Bhushan for CEOWORLD Magazine Updated:November 5, 2009

Toyota Motor Corp. (7203.TO), the world’s largest automaker, announced a 21.8 billion yen net profit for the July-September quarter, and cut its forecast loss for the year to 350 billion yen(3.9 billion U.S. dollars) on Thursday.

Toyota now anticipates a net loss of Y200 billion, much narrower than its previous forecast for a Y450 billion loss, as it expects to achieve cost-cuts worth Y1.250 trillion.

An investigation by the American authorities into a possible design flaw involving Toyota floor mats — which are suspected of having jammed accelerator pedals — has also muddied the picture for Toyota. A recall of the floor mats would affect 3.8 million vehicles, including the company’s top-selling Camry sedan, and the issue has already battered Toyota’s reputation for quality and safety.

The latest outlook “reflects booming demand sparked by (government measures) as well as hot sales of hybrid cars,” Yoichiro Ichimaru, a Toyota executive vice president, said at a press conference.

While Toyota’s upgraded forecast comes on the heels of improved fiscal-year projections by almost all major Japanese car makers, its latest estimates suggest a relatively slow recovery compared with rivals Honda Motor Co. and Nissan Motor Co. — both of which expect to return to operating profit this fiscal year.

Toyota still anticipates an operating loss of Y350 billion for this fiscal year compared with its previous projection for an operating loss of Y750 billion.

Ichimaru said he is also wary about a possible dent in demand in after subsidies are terminated in some markets.

“Prospects for markets remain unclear and we need to watch carefully” whether demand will drop again, Ichimaru said.

Toyota has suffered over the last year because the company had expanded its operations before the credit crisis hit Japan after the summer of 2008.

Since then, Toyota has implemented a series of measures to reduce its costs and be more competitive, including closing down plants and, on Wednesday, announcing that it would be withdrawing from Formula One racing.

The figures include sales at truck maker Hino Motors Ltd (7205.T) and compact car maker Daihatsu Motor Co (7262.T), but exclude vehicles made and sold by its joint ventures in China.

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