May 8, 2009 / 6:38 AM / 10 years ago

INSTANT VIEW: Toyota Motor forecasts big loss in year ahead

TOKYO (Reuters) - Toyota Motor Corp lost $6.9 billion in the final quarter and warned of a big loss in the just-started financial year as sales tumble.

For the year to next March, the maker of Prius hybrid cars forecast an operating loss of 850 billion yen, more than double the average forecast for a 387 billion yen loss from a survey of 20 analysts polled by Thomson Reuters.

Following are initial reactions from analysts and investors:

BANSEI SECURITIES

“The forecasts are bad and may spark selling of Toyota shares initially on Monday. However, this will, I think, run out of steam quickly, given the relatively positive stock market sentiment recently.

“Amid emerging signs of a recovery in economic indicators recently, the stock market has become quite immune to bad news and has focused increasingly on the time of recovery.

“Some stock market players may shrug off Toyota’s forecasts as overly conservative, believing in the prospects of economic recovery.”

TSUYOSHI MOCHIMARU, ANALYST, BARCLAYS CAPITAL

“Toyota’s sales volume projections look a little overly pessimistic, but given that its operating loss forecast is larger than expected, you cannot expect a profit this fiscal year.

“Toyota’s bad numbers make it stand out compared with Honda. However, the whole industry is facing excess capacity and declining sales.

“In the past two to three years Toyota did a lot of capital expenditure and increased manufacturing capacity, so now they are left with a lot of fixed costs to deal with.

“It is possible that their sales projections do not take into account Japanese government stimulus, so we may see an upward revision there. However, that does not mean Toyota will swing into the black.”

KOICHI OGAWA, CHIEF PORTFOLIO MANAGER, DAIWA SB INVESTMENTS

“The actual results aren’t so bad but the forecast was bad, very bad. Of course it’s hard to say much without knowing what the company says. But in terms of first impressions, this forecast was really shocking.

“Compared to Honda it has a lot of larger models and a lot of excess capacity globally. Its April U.S. sales were quite poor, so it appears their product strategy may be mistaken.

“By 2010 cost cutting and capacity reduction may be taking effect, so they could break even then. But it looks as if this year will probably be in the red.”

NAOKI FUJIWARA, FUND MANAGER, SHINKIN ASSET MANAGEMENT

“My first impression is bad. Toyota’s outlook was worse than I had expected. The company expects a really tough time for the first six months.

“I expect the bottom for the auto industry is April-June period, followed by a slow recovery.

“In terms of restructuring operations to fit the current market environment, I think Honda stays ahead of Toyota. But If Toyota can show clearly how it will return to profitability for the next financial year, its shares are unlikely to be sold so badly.”

MARKET ACTION:

Toyota shares closed down 1.5 percent at 3,980 yen ahead of the results announcement. They have risen 39 percent so far this year, underperforming a 47 percent rise on Tokyo’s transport sub-index.

Reporting by Tokyo Newsroom; Editing by Rodney Joyce

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