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Toyota earnings to reflect production disruptions

Toyota earnings to reflect production disruptions

Toyota's fiscal second quarter results, expected Tuesday, are almost certain to be dismal, given massive supplier disruptions from the March earthquake. The Japanese automaker is confident about making up for lost production in coming months even as it faces new supply and manufacturing disruptions from massive flooding in Thailand.
WHAT TO WATCH FOR: All Japanese automakers, including Toyota Motor Corp., were battered by shortages of parts after an earthquake and tsunami damaged key suppliers in northeastern Japan. That meant Toyota made and sold fewer cars than normal.
But the maker of the Prius hybrid and Camry sedan is having workers rack up overtime and do extra shifts to make up for lost sales during the rest of the fiscal year.
The automaker is also counting on solid sales in emerging markets such as India, China and Southeast Asia to keep growth going.
Yet it remains unclear how seriously it will be affected by the flooding in Thailand that has disrupted the supply of parts. Toyota said last week that production stoppages it had previously projected as lasting through Nov. 5 will continue through Nov. 12, costing Japan's top automaker 69,000 vehicles in lost production in Thailand, and 22,000 vehicles in Japan.
Toyota raised its forecast for the fiscal year through March 2012 in August to 390 billion yen ($5.1 billion), better than its earlier forecast for 280 billion yen ($3.7 billion) profit. But the new forecast is 4 percent lower than what it earned the previous year.
Toyota has also raised its annual sales forecast to 19 trillion yen ($250 billion) from 18.6 trillion yen ($244 billion), about the same as the previous year's 18.99 trillion yen.
Still, like other giant Japanese exporters, Toyota is fighting a surging yen, which erodes the value of overseas earnings.
WHY IT MATTERS: Toyota, which was the world's biggest automaker in annual vehicle sales last year, sank to No. 3 in the first half of this year, trailing U.S. rival General Motors Co. and Volkswagen AG of Germany.
But its global vehicle production recovered to pre-tsunami levels as of September, faster than its initial expectation of recovering by the end of this year, and highlighting Toyota's power to bounce back.
Toyota expects to sell 7.24 million vehicles during the fiscal year through March 2012, down from 7.31 million vehicles the previous year, although it may revise that projection upward.
For the January-March period, Toyota sold 1.79 million vehicles worldwide _ fewer than the 2.22 million vehicles GM sold.
Toyota officials say what's important is satisfying customers, not being No. 1. But the symbolic dethroning follows a battering the brand has taken in recent years, including massive global recalls that some analysts say show how rapid growth has unraveled once reputed quality controls.
WHAT'S EXPECTED: A FactSet survey of analysts forecasts Toyota to report an 85.4 billion yen ($1.1 billion) profit for the July-September quarter.
LAST YEAR'S QUARTER: Toyota's fiscal second quarter profit more than quadrupled last year compared to the previous year to 98.7 billion yen, despite lingering worries over the massive recalls dogging its U.S. sales. Quarterly sales rose 5.8 percent to 4.807 trillion yen.
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Updated : 2021-06-19 18:22 GMT+08:00