TOKYO Japan's top carmaker, Toyota Motor Corp (7203.T), is expected to report weaker quarterly earnings on Tuesday, hurt by a stronger yen and recent floods in auto-making hub Thailand, but investors will be hoping for an upgrade to its full-year profit guidance.
Thailand's deadly floods last fall came just as Toyota was ramping up production to recover from losses caused at home by Japan's earthquake in March 2011. Disruption from the floods cost Toyota 260,000 vehicles of lost output worldwide last year.
That knocked Toyota's sales down 6 percent in 2011, placing it behind General Motors Co (GM.N) and Volkswagen AG (VOWG_p.DE) in global vehicle sales.
The yen's prolonged strength also continues to weigh on Toyota, which by far has the biggest operations in Japan. Last year, the automaker built 2.76 million cars at home, accounting for a third of Japan's total vehicle production. It exported 57 percent of that, much of it at a loss.
For the October-December third quarter, nine analysts polled by Reuters put Toyota's operating profit at 93.9 billion yen ($1.23 billion), down 5.3 percent from the year before. Toyota is due to announce its results at 3 p.m. (0600 GMT) on Tuesday.
Last week, rival Honda Motor Co (7267.T) reported a plunge in profits, hit partly by a 6-yen fall in the dollar for the quarter.
With all but Thai production fully recovered, however, investors will focus on whether Toyota revises its operating profit forecast of 200 billion yen for the year to March 31.
Consensus forecasts from 23 analysts surveyed by Thomson Reuters I/B/E/S see a much higher 330.8 billion yen, counting on a sales recovery and deeper cost cuts.
SALES IMPROVING, YEN STILL WEIGHS
Toyota has forecast a 21 percent jump in sales this calendar year to 9.58 million vehicles, including subsidiaries Daihatsu Motor Co (7262.T) and Hino Motors Ltd (7205.T), possibly placing it back at the top of the sales ranking.
"It's premature to talk about any (sales) trends by looking only at our performance from last year when we had all those natural disasters," Toyota's president, Akio Toyoda, told reporters last week. "I would want Toyota to be measured on how we do this year, provided it's a peaceful one."
With the dollar trading around 76-77 yen, Toyota's Achilles' heel remains its heavy exposure to Japan.
Toyota is scrambling to make its domestic factories more efficient to keep its promise of building at least 3 million vehicles a year at home. A plan to return its Japan-based parent operations to break-even assumes a dollar rate of 85 yen.
In the near term, Toyota will benefit from the Japanese government's recent decision to reinstate cash-for-clunker subsidies and extend tax incentives on purchases of fuel-efficient cars, especially hybrids and other cars that employ new technologies. Its newest hybrid, the Aqua, received orders equivalent to 10 times the sales target in its first month.
Toyota's shares have risen 13 percent in the year to date, faring better than most other Japanese auto stocks and Tokyo's main Topix index .TOPX.
($1 = 76.5850 Japanese yen)
(Reporting by Chang-Ran Kim; Editing by Matt Driskill and Mark Bendeich)