Toyota Motor forecast a far bigger full-year loss than it had flagged just six weeks ago as the world's biggest automaker struggles to cut production fast enough to match a sharp drop in global sales.
A sudden dive in demand since late last year has caught automakers around the world flat-footed, but the pain is especially pronounced at Toyota, which is saddled with too much capacity after years of building new plants to keep up with demand.
Toyota started the current financial year with a bullish forecast to make 8.87 million vehicles in the 12 months to end-March. Today, it saw that number at 7.08 million, down by a fifth, as it put a third of its global assembly lines on a single shift.
"The sales environment has worsened dramatically in the past month and a half in the main markets of Japan, North America and Europe," executive vice president Mitsuo Kinoshita told a news conference.
For the year to the end of March, Toyota now expects an operating loss of 450 billion yen ($4.95 billion), three times what it forecast in late December and a similar consensus forecast in a Reuters Estimates survey of 18 brokerages.
Toyota changed its annual net forecast to a 350 billion yen loss from a 50 billion yen profit. It would be its first net loss since 1950.
Citing the likelihood of persistent pressure on Toyota's earnings through next year, Moody's Investors Service earlier cut its credit rating on Toyota for the first time in a decade, to AA1 from AAA.
For its October-December third quarter, Toyota reported an operating loss of 360.5 billion yen against a year-earlier profit of 601.6 billion yen.
It posted a third-quarter net loss of 164.6 billion yen against a year-earlier profit of 458.7 billion yen. Revenue fell 28 percent to 4.80 trillion yen.
"This is absolutely awful," said Yoshinori Nagano, chief strategist at Daiwa Asset Management.
"But hopes for US economic steps and their effectiveness have supported the company's stock, and that will likely continue even after the earnings. Still, if something goes wrong on that front, that could batter the stock price once again."
Kinoshita said he expect the US market to stay at the current low levels for the time being and begin to turn up around the year-end, supported by President Barack Obama's stimulus package.
Reuters