Sunday, November 13, 2011

Toyota’s profit hit by floods, strong yen

Toyota said Tuesday its quarterly profit tumbled 18.5 percent on plunging sales caused by parts shortages from the tsunami disaster that hit northeastern Japan earlier this year.

Japan’s top automaker said that vehicle sales plunged in the key markets of Japan and North America, but it also said it was making up for some of the losses by strong sales in countries such as India and Indonesia.

Toyota also warned that it faces a new challenge from flooding in Thailand, declining to give a forecast for the full financial year ending March 2012, citing uncertainties stemming from the recent Thai floods which have disrupted supplies of parts and prompted it to cut some car production.

All the Japanese automakers are suffering after the March 11 earthquake and tsunami in Japan that damaged the operations of their key parts suppliers. That meant they made and sold fewer cars than normal.

The Thai floods, which began in July and now threaten central Bangkok, are compounding the production damage. The country is the Southeast Asian base for several automakers. Toyota said production cuts in Japan, which began last month, will continue through Nov. 18.

Also battering Toyota, which makes the Prius hybrid, Camry sedan and Lexus luxury models, is the surging value of the yen.

The automaker’s President Akio Toyoda said earlier this week that the strong yen has reached levels “far beyond what is tolerable,” threatening to make it necessary to move production out of Japan.

He asked the government to do more to prop up the dollar, stressing that manufacturing in Japan could be “destroyed.” Toyota said the unfavorable exchange rate erased 80 billion yen ($1 billion) from its latest quarterly net income.

Toyota was the world’s biggest automaker in annual vehicle sales last year, but it sank to No. 3 in the first half of this year, trailing U.S. rival General Motors and Volkswagen AG of Germany.

Toyota had shown tremendous ability to bounce back after the March disaster, reaching pre-tsunami levels of global production in September, faster than its initial expectation of recovering by the end of this year.

But then the floods in Thailand struck and are expected to cost Toyota tens of thousands of vehicles in lost production.

For the first half spanning April 1 through Sept. 30, Toyota’s profit nose-dived nearly 72 percent to 81.6 billion yen ($1 billion). It had eked out a tiny profit in the April-June first quarter. First-half sales fell 17 percent to 8.01 trillion yen ($103 billion).

The Associated Press contributed to this report.

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