TOKYO - Toyota Motor Corp. said it sank into a 765.8 billion yen (US$7.7 billion) net loss for the January-March quarter, bringing its loss for the full fiscal year to a bigger-than-expected 436.94 billion yen -- its worst result ever.
The outlook amid a serious global auto slump is even grimmer: The world's biggest automaker projects that net losses will deepen to 550 billion yen for the fiscal year through March 2010.
President Katsuaki Watanabe said the devastating results were caused by "the significant deterioration in vehicle sales particularly in the U.S. and Europe," the strong yen and the rising cost of raw materials.
It was Toyota's first annual net loss since 1950. The quarterly loss was bigger than the full-year loss because it had some positive quarters earlier in the fiscal year.
The maker of the Prius hybrid and Lexus luxury models had been forecasting a 350 billion yen net loss for the just-ended fiscal year, and analysts surveyed by Thomson Reuters had expected Toyota's net loss to total about 373 billion yen.
For the January-March period in 2008 -- back when the Japanese automaker's sales were booming -- Toyota had recorded a net profit of 316.8 billion yen. It had racked up a record profit of 1.72 trillion yen the previous fiscal year, riding on its reputation for quality and good mileage.
Toyota's business has been hit hard by the U.S. financial crisis and credit crunch, which sent ripple effects around the world. Although it is in far better health than American rivals General Motors Corp. and Chrysler LLC, its annual sales plunged 21.9 per cent to 20.529 trillion yen for the fiscal year. In the year ahead, it sees sales sliding 19.6 per cent to 16.5 trillion yen.
But Robert Wiseman, professor of business at Michigan State University in East Lansing, said Toyota should emerge in good shape in the long run, and can even hope to benefit from a decrease in price competition in the U.S. as rivals weaken.
"Toyota continues to have a very strong positive brand reputation among North American buyers," he said. "I would expect all global car manufactures to report a loss this fiscal year since car sales are way down."
In the key industrialized markets -- U.S., Europe and Japan -- overall market demand has dwindled over the past year by 20 per cent to 30 per cent.
Toyota has been slashing managerial pay and offering buyouts to thousands of American workers. It has reduced the number of temporary workers in Japan from 9,200 last year to 3,000.
But a turnaround is likely to take time.
The manufacturer is expecting its operating loss -- reflecting its core automaking business -- to worsen to 850 billion yen for the year through March 2010 from 461 billion yen this past year.
"It appears to take some more time before the financial markets in the U.S. and Europe normalize and the global economy recovers," Watanabe said.
Toyota's vehicle sales for the fiscal year ended March 31 fell 15.1 per cent to 7.57 million vehicles from 8.91 million vehicles the previous year. It expects to sell even fewer vehicles in the fiscal year through March 2010 -- 6.5 million vehicles.
For the fiscal year, Toyota's sales in Japan sank 11.1 per cent to 1.95 million vehicles. But it still managed to raise its Japanese market share to a record 46 per cent. Its North American annual sales tumbled 25 per cent to 2.21 million vehicles.
Wiseman, the MSU professor, says Toyota should prepare for an eventual recovery.
"What Toyota can do as it waits for the economy to turn around is invest in the next generation of vehicles and work on improving quality control in its production facilities," he said.
To send a message of change, Toyota has turned to its founding family roots, tapping Akio Toyoda, the founder's grandson, who at 53 is relatively young for leading a major conservative Japanese company.
Watanabe promised Friday more cost reduction and a focus on hybrids and compact vehicles to boost profitability. Toyota will work on ecological technology such as hybrids and plug-in vehicles toward long-term recovery, Watanabe said.
Toyota is unveiling the remodeled, third-generation Prius hybrid, one of its flagship models, later this month. But it is expected to be embroiled in intense competition in the green technology market with Japanese rival Honda Motor Co., which has already come out with the cheaper Insight model.
Yasuaki Iwamoto, auto analyst with Okasan Securities Co. in Tokyo, said Toyota must wait for overall industry woes to settle, but also must work on cut costs and develop cheap small cars.
"It must keep working on small cars to build toward the future," he said.
