* Sees 2011/12 op profit Y200 bln vs consensus Y419 bln
* Previous forecasts withdrawn last month due to Thai floods
* Inventory build-up set to lift production to record
* Strong yen pulls parent operations deeper into red
* Europe crisis spreading to emerging markets a worry - CFO
By Chang-Ran Kim, Asia autos correspondent
TOKYO, Dec 9 Toyota, set to lose its crown as
the world's top-selling automaker this year, more than halved
its annual profit forecast to $2.6 billion, reeling from a
strong yen and Thai floods that severed its supply lines.
Toyota Motor Corp's inability to make enough cars -
production was also ruptured by the earthquake and tsunami in
Japan in March - is expected to see it overtaken in sales this
year by General Motors Co and probably Volkswagen AG
While Toyota is poised for record production next year as it
rebuilds depleted inventories, the yen's persistent strength
against virtually every major currency means profit recovery
will continue to be slow given its huge exposure to exports.
"Toyota is hitting a trough," said Cho Soo-Hong, auto
analyst at Woori Investment & Securities in Seoul.
"Its market share will recover next year with output
normalisation and new model launches, but I don't expect too
much from Toyota's earnings as the yen is expected to remain
strong because of appetite for safe-haven assets."
Japan's top automaker expects operating profit to fall 57
percent to 200 billion yen in the year to end-March, well below
a consensus forecast of 419 billion yen in a survey of 23
analysts by Thomson Reuters I/B/E/S.
The company's previous forecast of 450 billion yen, issued
in August, was withdrawn last month after Thailand's worst
floods in 50 years cut off the supply of parts to Toyota's
factories in 10 countries. It said the floods would effectively
cost the company 230,000 vehicles in lost production this
With floodwaters having receded and recovery work under way
at Thailand's industrial parks, Toyota has said its production
has returned to normal in most regions, leaving just Thailand
and South Africa operating at reduced rates. It said on Friday
Thai production was expected to return to normal this month.
Toyota projected an annual net profit of 180 billion yen,
down 56 percent from last year and a sharp cut from its previous
forecast of 390 billion yen.
The Thai floods and the March earthquake and tsunami hit
Japanese automakers particularly hard due to their dominance at
home and across southeast Asia.
Toyota said the floods accounted for 120 billion yen of the
downward revision to operating profit, while the yen's strength,
which makes exports less competitive and eats into overseas
profits when brought back to Japan, cut another 190 billion yen.
These were offset by 60 billion yen in profit-boosting measures.
Once the supply issues are repaired, Toyota's new models,
including the Camry sedan, are set to pose tough competition for
rivals such as Hyundai Motor Co next year, analysts
But Chief Financial Officer Satoshi Ozawa expressed deep
frustration with the firm yen, which Tokyo has failed to weaken
through intervention, warning that current exchange rates could
threaten Japan's very foundation as an export-driven economy.
"(The revision) is partly because Toyota's exposure to
currency swings is big, but I think it also brought to light the
severity of the crisis Japan is in, because the country is
founded on its export strength," Ozawa told a news conference.
Toyota has committed to building 3 million vehicles a year
in Japan by improving its cost structure and selling more cars
at home, accounting for about 40 percent of its total global
output. With more than half of that bound for export, its
parent-only operating loss forecast ballooned to 530 billion
yen, from a previous outlook of 370 billion yen.
Ozawa said the strong yen was forcing Toyota to raise car
prices significantly in some markets, even if that dents sales
volumes. Toyota expects to sell 7.38 million vehicles worldwide
in this financial year, fewer than the 7.6 million it flagged in
"It will be difficult to keep domestic production if the
dollar stays below 80 yen," said Yasuo Sakuma, portfolio manager
at Bayview Asset Management.
"When the dollar fell from 100 yen to 90 yen, or from 90 yen
to 80 yen, the main question was whether Toyota can cope with
the pace of the yen's strengthening. But when the dollar is
below 80 yen, the problem is the absolute level of the dollar.
Given this, we just can't buy Toyota shares."
Those shares closed down 0.4 percent at 2,636 yen before the
forecasts were announced. The stock has fallen 18 percent this
year, in line with Tokyo's main Topix index, and last
month touched a 15-1/2-year low. Shares in Honda Motor Co
are down 24 percent year to date.
Under a new business plan, Toyota is aiming for operating
profit of at least 1 trillion yen and an operating margin of 5
percent over the next year or so, assuming parent-only sales of
7.5 million vehicles and a dollar of 85 yen. The dollar
currently trades at 77-78 yen.
Ozawa said the European debt crisis posed another worry. As
well as dampening demand in the region, he said, the crisis
could prompt banks to pull money out of emerging markets and
touch off a recession there, which in turn could also weaken
those countries' currencies against the yen.
"The latter two factors would have a very big impact on our
operations," Ozawa said. "We're watching developments very
carefully ... as we compile our plans for next year and the year
Among Japan's automakers only Honda, the hardest hit by the
series of natural disasters, has yet to come out with annual
guidance. The chief financial officer has said he expects to
provide annual forecasts by late-January.