Toyota posts massive lossOn 09/30/2019 by admin
Toyota Motor Corporation forecast its first-ever operating loss this year as the global slowdown creates “an unprecedented crisis” for the long profitable automaker.
Toyota\’s sharp cuts in forecasts marked a deepening of the woes plaguing the auto industry, which has seen General Motors and Chrysler, two of the US Big Three automakers, on the verge of collapse due to the global financial turmoil.
Toyota, which vies with GM for the crown of the world\’s largest automaker, said it was cutting back production and investment as a slump in sales and a soaring yen wreak havoc on its balance sheet.
“The company is facing an unprecedented crisis where it cannot avoid posting an operating deficit in this term,” Toyota president Katsuaki Watanabe told a news conference at the company\’s hub in central Japan.
Toyota, which earlier cut 3,000 jobs in Japan, said it would freeze the launching of a new factory in the US state of Mississippi and scale back production in India.
“The company has decided to either delay or review almost all projects aimed at expanding production ability or building new plants,” Watanabe said.
Japan\’s top automaker said it expected an operating loss of 150 billion yen (1.69 billion dollars) for the financial year, the first loss since it started reporting annual earnings in March 1941. Last year it posted 2.27 trillion yen in operating profit.
Toyota said it still expected to make a profit on a net level but cut its forecast sharply to 50 billion yen, down from a previous estimate of 550 billion yen.
EU stocks down
Toyota\’s forecast was matched by downbeat news from Europe, where the CAC 40 stock market index in Paris plunged 2.31 percent at the close, the Frankfurt DAX was down 1.23 percent and the FTSE in London slid 0.88 percent on pre-Christmas gloom.
Share prices were also down in early trading on Wall Street.
A poll in Germany showed consumer confidence in Europe\’s biggest economy has stagnated at less than half the rate at which it was in December 2007.
Russia\’s biggest car plant, Avtovaz, part owned by France\’s Renault, said it was suspending production for January because of the economic crisis.
In the eurozone economies, industrial orders were down 4.3 percent in October compared to September, falling by 15.1 percent year-on-year, data published by the European statistics office Eurostat showed.
Car demand falls
Toyota has enjoyed hefty profits in recent years fuelled by demand overseas, particularly in the United States, for its eco-friendly hybrid cars.
But demand has fallen sharply in the United States as a credit crisis at banks drags down the entire economy. The White House on Friday offered a 13.4-billion-dollar government lifeline to keep GM and Chrysler afloat.
Analysts said Toyota\’s revision showed the global crisis was affecting all automakers, not just Detroit\’s long troubled Big Three, which also includes Ford.
“It is symbolic for a company like Toyota, representing Japan, to suffer a loss,” said Yasuaki Iwamoto, auto analyst at Okasan Securities.
“Not only Toyota but all the carmakers are finding it crucial to get to the end of this abnormal market condition,” he said.
For the current year, Toyota now expects global sales worth 21.5 trillion yen, down from an earlier estimate of 23.0 trillion yen. It plans to sell 8.96 million vehicles this calendar year, down four percent from a year earlier.
But Watanabe said he believed that global demand will eventually return, especially in emerging economies, once the credit crisis settles — and that Toyota will be in a strong position.