Toyota Fiscal H1 Earnings Fall; Sees Moderate Impact From Thai Floods

Toyota says first-half earnings for its current fiscal year ending March 31, 2012, fell compared with year-ago, as effects of Japan’s earthquake and tsunami in March and the strong yen hobbled the No.1 Japanese auto maker.

For the April-September period, Toyota reports an operating loss of ¥32.6 billion ($419 million), compared with a profit of ¥323.1 billion ($4.15 billion) year-ago.

The auto maker places the earthquake-related impact on operating income at ¥320 billion ($4.11 billion).

New U.S.-built ’12 Camry sourcing 90% of parts from North America.

Isolating the second quarter, Toyota saw a 36.1% drop in operating income, a 4.8% loss in net revenues and an 18.3% reduction in net income.

Toyota declines to provide a forecast for fiscal-year earnings due to uncertainty about the impact of the flooding in Thailand. Senior Managing Officer Takahiko Ijichi tells financial analysts in a conference call today it will not be "as great as the impact we suffered from the Great Japan Earthquake."

Unlike competitor Honda, Toyota's Thai plant is not physically damaged but has halted production from Oct. 10-Nov. 12 due to a shortage of vehicle parts, including electronic components, the auto maker sources from Thailand for many of its overseas markets.

The supply-chain problem has slightly scaled back slight reductions in Toyota’s North American production, now down to 90% of plan. The auto maker also cut its output in Japan this week and next to 70%-80% of plan.

While sales fell sharply in Japan and North America because of production stoppages caused by the Japanese earthquake, Toyota says increased deliveries in India, Indonesia and Thailand were a bright spot in its fiscal first half.

Toyota's consolidated fiscal first-half sales fell to 3.026 million units, down 689,000 from like-2010. Of that loss, 288,000 units were from Japan and 352,000 from North America. The auto maker sold 615,000 vehicles in Asia, up 40,000 from prior-year.

Most of the sales losses came in the first quarter. Second-quarter consolidated sales dropped 90,000 units to 1.805 million, reflecting production recovery following the earthquake.

The strong yen hurt Toyota's earnings, with ¥130 billion ($1.67 billion) in exchange-rate effects the single largest cause to the auto maker’s first-half operating loss of ¥355.7 billion ($4.57 billion).

Ijichi says Toyota still is committed to maintaining at least 3 million units of vehicle production in Japan but is looking for ways to stem yen-related bleeding. Sourcing parts from foreign suppliers outside Japan or from Japanese suppliers operating overseas are two measures the auto maker is exploring.

"Currently, we are not importing that many parts from overseas, but there are many capable manufacturers and suppliers in Asia, so taking advantage of those capable suppliers outside Japan is possible," Ijichi says.

He notes 90% of parts used in the new '12 Camry sedan, built in Georgetown, KY, and Lafayette, IN, are from North American suppliers.

In the U.S. market, Toyota forecasts industry sales of 13 million units for calendar 2011.

The auto maker expects to sell 1.58 million units in the U.S. this year, with new models including the recently launched Camry, next-generation Yaris and all-new Prius V boosting demand.

Ijichi says Toyota has reduced incentive spending in North America, contrary to "perplexing" outside data suggesting otherwise. "At this point in time, (Toyota’s per-unit) incentive is around one-half (of that) announced or reported."

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