Toyota forecasts loss as sales slide
Top Japanese automaker takes toll from plummeting auto sales.
NEW YORK (CNNMoney.com) -- Japanese auto giant Toyota said Monday that it would suffer an operating loss due to plummeting auto sales and a strong local currency.
About 30 minutes after the market closed in Tokyo, Toyota said it expected to lose approximately $1.5 billion to $1.7 billion this fiscal year. Toyota reports earnings on a fiscal calendar beginning in April.
This would be Toyota's first operating loss since 1950, Toyota spokesman Steve Curtis said.
Despite the likely operating loss, Toyota expects to post a $557 million net profit for the fiscal year. The profit stems, in large part, from joint ventures whose revenues are not included in the automakers' accounting for its operating profits.
Toyota's joint ventures include a facility in Japan, operated in co-operation with Panasonic, that produces batteries for hybrid vehicles and a factory in California, operated jointly with General Motors, that builds the Toyota Corolla sedan and the Pontiac Vibe small wagon.
Falling car sales in the United States and abroad have been taking a major toll on automakers.
Toyota will sell about 1.4 million fewer vehicles globally this fiscal year -- about 7.5 million vehicles in all -- than it did last year. The company's North American sales will be particularly hard-hit, dropping by 250,000 units, according to the automaker.
Toyota reports results based on a fiscal year calendar beginning in April.
Toyota (TM) said Monday that it expected worldwide auto sales in calendar year 2008 to decline 4%.
Japanese exports have suffered because of currency exchange rates. The rising value of the yen sent Japan's trade deficit shooting up to $2.5 billion in November, according to the Japanese government. Exports fell 27% on a month-over-month basis.
Toyota expects losses of about $2.2 billion due to currency exchange rates alone.
Toyota's main Japanese rival, Honda (HMC), reduced 2009 earnings estimates and cut its forecast for 2008 last week, saying there was "no prospect for recovery" as auto sales and the economy continue to deteriorate.