Toyota's Watanabe in crisis mode after N.A. loss

Toyota's Watanabe in crisis mode after N.A. loss

Hans Greimel
Automotive News
November 6, 2008 - 7:21 am ET
UPDATED: 11/6/08 12:12 p.m. EST

TOKYO -- The once mighty Toyota profit machine tumbled to a rare loss in
North America, sending President Katsuaki Watanabe into crisis mode as he
slashed sales and profit predictions.

Toyota Motor Corp. now expects global operating profit to plummet 73.6
percent to ¥600.0 billion, or $5.83 billion in the fiscal year ending March
31.

Just three months ago, Toyota had forecast operating profit to drop a
comparatively modest 29.5 percent to $15.5 billion. The new goal would be
Toyota's lowest operating profit since the company began calculating in U.S.
accounting standards in 1998.

The U.S. market meltdown has upended Toyota's profit picture.

North America slumped to a $335.9 million operating loss in the
April-September fiscal first half. Sales there slid 9.4 percent to 1.36
million vehicles in the period.

"This is an unprecedented situation," Executive Vice President Mitsuo
Kinoshita said here today while delivering financial results. "Every week,
the environment gets worse."

Kinoshita said things won't improve until late 2009 at the earliest.

Watanabe is chairman of a committee charged with keeping Toyota in the black
in 2009 and 2010. Details are scant, but the committee will review
everything from pricing to the product pipeline.

Aside from shriveling U.S. demand, Toyota also is getting hit by a rising
yen. The yen has gained nearly 12 percent against the dollar since August,
reducing the value of dollar-denominated sales when converted back into
Toyota's home currency.

Looking ahead, Toyota also slashed its global sales target. It now expects
sales to fall 7.6 percent to 8.24 million units this fiscal year. It had
earlier forecast 8.74 million vehicles.

Net income also will fall significantly, Toyota warned. The new outlook
calls for a 68.0 percent drop to $5.34 billion for the year. That is less
than half Toyota's earlier forecast for net income of $11.7 billion.

A large part of Toyota expected losses will come form the fact that if they
do not have "profits" earned in the US to be brought back to Japan to be
retuned as "Capital Investment" in new models, they will loose the big cash
bonuses they get from the Japanese "Investment Tax," fund worth millions of
Yen annually.


"Ed White" <cewhite3@mindspring.com> wrote in message
news:hsWdnWTlebu-VI7UnZ2dnUVZ_sWdnZ2d@earthlink.com...
> Toyota's Watanabe in crisis mode after N.A. loss
>
> Hans Greimel
> Automotive News
> November 6, 2008 - 7:21 am ET
> UPDATED: 11/6/08 12:12 p.m. EST
>
> TOKYO -- The once mighty Toyota profit machine tumbled to a rare loss in
> North America, sending President Katsuaki Watanabe into crisis mode as he
> slashed sales and profit predictions.
>
> Toyota Motor Corp. now expects global operating profit to plummet 73.6
> percent to ¥600.0 billion, or $5.83 billion in the fiscal year ending
> March 31.
>
> Just three months ago, Toyota had forecast operating profit to drop a
> comparatively modest 29.5 percent to $15.5 billion. The new goal would be
> Toyota's lowest operating profit since the company began calculating in
> U.S. accounting standards in 1998.
>
> The U.S. market meltdown has upended Toyota's profit picture.
>
> North America slumped to a $335.9 million operating loss in the
> April-September fiscal first half. Sales there slid 9.4 percent to 1.36
> million vehicles in the period.
>
> "This is an unprecedented situation," Executive Vice President Mitsuo
> Kinoshita said here today while delivering financial results. "Every week,
> the environment gets worse."
>
> Kinoshita said things won't improve until late 2009 at the earliest.
>
> Watanabe is chairman of a committee charged with keeping Toyota in the
> black in 2009 and 2010. Details are scant, but the committee will review
> everything from pricing to the product pipeline.
>
> Aside from shriveling U.S. demand, Toyota also is getting hit by a rising
> yen. The yen has gained nearly 12 percent against the dollar since August,
> reducing the value of dollar-denominated sales when converted back into
> Toyota's home currency.
>
> Looking ahead, Toyota also slashed its global sales target. It now expects
> sales to fall 7.6 percent to 8.24 million units this fiscal year. It had
> earlier forecast 8.74 million vehicles.
>
> Net income also will fall significantly, Toyota warned. The new outlook
> calls for a 68.0 percent drop to $5.34 billion for the year. That is less
> than half Toyota's earlier forecast for net income of $11.7 billion.
>