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Posted: Thursday, 07 August 2008 5:28AM
Toyota 1Q Profits Fall 28 Percent
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Tokyo (AP) -- Toyota's fiscal first-quarter profit plunged 28 percent from the previous year as slipping North American sales, a strong yen and rising material costs dented the earnings of the Japanese automaker.
Toyota Motor Corp. has so far avoided the kinds of deep losses racked up by U.S. automakers such as General Motors Corp. and Ford Motor Co. But even Toyota, Japan's top automaker, is seeing the momentous pace of its sales growth slow amid a U.S. downturn and soaring gas prices.
Toyota reported Thursday that its April-June profit fell to 353.66 billion yen (US$3.23 billion) from nearly 492 billion the same period the previous year. Quarterly sales edged down 4.7 percent to 6.215 trillion yen (US$56.8 billion).
Toyota, which makes the Prius gas-electric hybrid and Lexus luxury models, has been running neck-and-neck in global vehicle sales with GM, which has been the world's top automaker for 77 years.
Toyota sold 4,817,941 vehicles globally during the first six months of the calendar year, beating GM by 277,532 vehicles.
Still, Toyota is foreseeing tough times ahead.
Last month, Toyota lowered its global vehicle sales plan for this calendar year by 350,000 vehicles to 9.5 million vehicles, blaming the sluggish North American market. The pace of Toyota's growth has been slowing to a 1 percent gain this year in contrast to a 6 percent climb in 2007.
For the latest quarter, Toyota sold 2.19 million vehicles worldwide, up 1.1 percent, or 24,000 vehicles, on year.
Toyota's North American sales fell by 33,000 vehicles, or 4.3 percent, to 729,000. European sales were down by 32,000 vehicles, or 9.6 percent, to 301,000.
Koji Endo, auto analyst at Credit Suisse in Tokyo, said the troubles at Toyota in maintaining profits and vehicle sales were worse than it looked on the surface because of what he characterized as some bookkeeping stunts that were boosting the numbers.
"The numbers on the surface don't look that bad, but when you look at what they are showing, the situation is extremely tough for Toyota,'' he said.
Toyota's vehicle sales in emerging markets are rising, though, with sales in Asia - where the remodeled Corolla is popular - up by 40,000 vehicles, or 18 percent, to 262,000.
Toyota is in a better position than some rivals to ride out the gasoline-price crunch because it doesn't have as many trucks or other gas-guzzlers in its lineup and boasts a reputation for good mileage.
Toyota said it gained in U.S. market share to a record high 17.4 percent for the quarter.
But the strengthening yen, which tends to eat away at the profits of Japanese exporters, cost Toyota 200 billion yen (US$1.8 billion) in the latest quarter, it said.
Toyota said the dollar traded at about 105 yen in the quarter ended June 30, down 13 percent from 121 yen in the same period in 2007.
Detroit-based GM has reported a US$15.5 billion loss for the April-June quarter, while Ford lost US$8.67 billion, its worst quarterly performance in its history.
Toyota's sales in its sluggish home Japanese market also improved, gaining 12,000 vehicles, or 2.4 percent, to 512,000 vehicles for the quarter on strong demand for the new Crown sedan. Exports from Japan to Russia, Australia and the Middle East were also strong, it said.
Toyota kept unchanged its forecast for the fiscal year through March 2009 at 1.25 trillion yen (US$11.43 billion) profit on 25 trillion yen (US$228.52 billion) sales.
That would be a 27 percent on-year dive in profit - its first full-year profit drop in seven years - and a 4.9 percent drop in sales.
The shift to smaller vehicles hurts Toyota as well as other automakers because profit margins aren't as hefty as for trucks. Toyota has been shifting North American production to smaller models to meet demand.
Toyota shares dipped 1.3 percent to 4,580 yen (US$41.9). Toyota announced earnings shortly after trading ended on the Tokyo Stock Exchange.
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