Motor Corp. now says it will see its first-ever operating loss in its 70-year history.
After calling for an operating profit of ¥600 billion ($6.68 billion) in early November, Japan’s No.1 auto maker now says it will see a loss for its fiscal year, ending March 31, of ¥150 billion ($1.67 billion).
“We are facing an unprecedented emergency,” Reuters quotesPresident Katsuaki Watanabe as saying at the auto maker’s year-end press conference. “This is a crisis unlike the crises of the past.”
A Japanese financial analyst tells Reuters Toyota possibly could fall into negative territory in the coming fiscal year as well.
“This is very, very, very bad,” Koichi Ogawa, chief portfolio manager at Daiwa SB Investments, tells the wire service. “This is also not just a problem for Toyota. What is good for Toyota is good for the Japanese economy.”
Toyota also revises its net profit forecast downward from early November by ¥500 billion ($5.57 billion) to ¥50 billion ($557 million) and slashes its calendar 2008 global vehicle sales expectations to 7.99 million units, down 5% from 2007.
Including its Daihatsu andunits, Toyota projects its calendar 2008 sales to fall 4% below year-ago to 8.96 million units.
Toyota takes these actions in light of the economic crisis, which has its roots in the U.S., the auto maker’s largest market, and has rippled overseas, affecting all auto makers and their associated industries.
In addition to actions Toyota has taken in recent weeks, which include the postponement of construction on some manufacturing plants, including its new Prius plant in Mississippi, the auto maker now says it will postpone all capacity expansion projects and go to a single shift for 16 of 75 assembly lines around the world.
Toyota also is canceling annual bonuses for its directors and even unplugging electric hand dryers at its headquarters building in Nagoya to cut costs, Reuters reports.
The auto maker did not project sales or production units for the coming calendar year, with Watanabe sounding the alarms the worst may not be over.
“We need to be prepared for the tough conditions to continue, and maybe even worsen,” he says.