* Raises full-year operating profit fcast to Y450 bln from
* Q1 operating loss 108 bln yen vs consensus 190 bln yen
* Sees return to normal production in Sept, ahead of
* Warns of stiffer competition vs Korean, European brands
* Toyota shares end down 0.3 pct before results
By Chang-Ran Kim
TOKYO, Aug 2 Toyota Motor Corp slumped
to its first quarterly loss in two years after the March 11
disaster virtually halted production, and the Japanese auto
giant warned the stronger yen was hobbling it in the battle
against South Korean rivals.
The loss was smaller than investors feared and the world's
largest automaker said supply chains were recovering quickly,
enabling it to raise its full-year operating profit forecast by
half, to 450 billion yen ($5.9 billion).
Analysts expect a stronger showing for the year to March
2012 from Toyota, which is typically conservative in its
forecasts, but highlighted the challenges ahead.
"Toyota has shown that it is recovering well from the
quake, but its upward revision is below market expectations,"
said Hideyuki Suzuki, general manager of investment market
research at SBI Securities in Tokyo.
"Their currency assumption is lower than the actual rate and
with the U.S. economy faltering, there's going to be pressure on
the yen to rise further. Automakers risk a double punch of a
high yen and weak demand," he added.
Domestic rivals Nissan Motor Co and Honda Motor Co
have both topped expectations with their quarterly
earnings in recent days as production ramps up, with Honda
hiking its annual forecasts.
DEFINED BY CURRENCY SWINGS
Toyota's annual operating profit forecast, which excludes
earnings from China, is up from previous forecast of 300 billion
yen but still short of the 530 billion yen consensus in a poll
of 20 analysts by Thomson Reuters I/B/E/S.
Even before the March disasters and the yen's recent surge,
Toyota had been trying to slash costs by roughly 30 percent to
take on South Korea's Hyundai Motor Co , which has
steadily gained market share.
Toyota executives have said that building as many cars as it
does in Japan was illogical from a pure profit standpoint, but
have stopped short of flagging a politically sensitive shift
"I think that in some ways, our history has been defined by
a constant battle against currency swings and it's made us
stronger," Senior Managing Officer Takahiko Ijichi told a news
conference, lamenting the absence of decisive action by the
Japanese government against the rising yen.
"But this (dollar) level below 80 yen, of 76 yen, and the
speed of the yen's rise is way beyond the limit."
Ijichi said Toyota would try to fight the yen's strength by
buying more parts overseas -- a move that he warned could
indirectly shift Japanese manufacturing overseas through the
component supply chain.
Toyota would also aim to raise product prices wherever
possible, he said, but admitted that would be difficult against
tougher competition in many markets.
"In the past, when we faced a strong yen we were competing
in cost mainly against other Japanese brands," Ijichi said.
"Now, things are different."
With the dollar around 15 yen weaker than it was early last
year, a $20,000 car sold in the United States would give Toyota
$3,000 less in gross profit, Ijichi said.
Still, Ijichi said Toyota intended to defend its market
share in the United States, its single-biggest market, through a
new model launches, bigger sales to fleet customers and by
"By next March, we expect to gain back the market share we
had before the quake," he said.
Toyota said it now assumes a dollar rate of 80 yen
instead of 82 yen this year and the euro at 116 yen instead of
115 yen. On Tuesday, the dollar was trading around 77.35
yen while the euro was around 110.25 yen.
"Toyota will try hard to make up for lost time," said Lee
Yong-jik, a fund manager at Pine Bridge Investment in Seoul,
expecting aggressive marketing as Toyota launches new models
such as the revamped Camry due soon in the United States. "But
in terms of currencies, Toyota is still at a disadvantage to
The yen has strengthened by almost half against the won over
the past three years.
FASTER QUAKE RECOVERY
Toyota builds about 40 percent of its vehicles in Japan,
exporting more than half of that, making it more vulnerable to a
strong yen than domestic rivals. Both Nissan and Honda reported
a profit for the April-June quarter.
Toyota made a first-quarter operating loss of 108 billion
yen ($1.4 billion), swinging from a 211.7 billion yen profit a
year earlier. The loss was better than the average loss estimate
of 190 billion yen in a survey of six analysts by Thomson
The maker of the Prius and other hybrids posted a net profit
of 1.2 billion yen, melting away from 190.5 billion yen the
previous year. Revenue fell 29 percent to 3.44 trillion yen.
Supply constraints from the disasters have eased faster than
initially feared and Toyota said unrestricted production would
return in September, about two months ahead of a previous
Through overtime and extra shifts, Toyota plans to build
7.72 million vehicles this business year, or 330,000 more than
it had flagged in June.
Shares in Toyota are down 1.6 percent so far this calendar
year, better than a 2.6 percent drop in the benchmark Nikkei
average . Before the results were announced on Tuesday,
Toyota shares closed down 0.3 percent at 3,160 yen in Tokyo.
($1 = 76.615 Japanese yen)
(Additional reporting by Daiki Iga and Yuko Inoue in Tokyo,
Hyunjoo Jin in Seoul; Editing by Matt Driskill and Lincoln