December 13, 2008 / 2:23 AM / in 9 years

Toyota likely to report loss in second half

TOKYO (Reuters) - Toyota Motor Corp (7203.T) is likely to further cut its earnings forecasts and report an operating loss of about 100 billion yen ($1 billion) in the October-March period, Japanese media reported on Saturday.

A company spokesman declined to comment.

But analysts say that with the yen soaring and global vehicle sales sliding more than expected, Toyota was well on its way to falling into the red in the second half. The yen rose to a 13-year high versus the dollar to 88.10 yen on Friday.

Toyota, the world’s No.1 automaker, has set its currency assumptions at 100 yen to the dollar for the October-March second half, and the euro at 130 yen. The European currency is trading at a more unfavorable 122 yen.

Goldman Sachs this week lowered its full-year operating profit forecast for Toyota to 208 billion yen from 624 billion yen, expecting further production cuts.

The brokerage’s forecast would signify a loss of 374 billion yen in the second half, much bigger than what was reported by Kyodo news agency on Saturday, which put the loss at 100 billion yen, citing “informed sources.”

The Asahi Shimbun daily carried a similar report without citing sources, saying the second-half loss would be over 100 billion yen if the yen did not weaken significantly.

It would mean Toyota’s operating profit for the year to March 2009 would amount to 420 billion yen at best, more than 80 percent lower than the 2.27 trillion yen Toyota made in operating profit last year, Asahi added.

The expected loss in the second-half would be Toyota’s first for a six-month period since it began reporting under U.S. accounting rules in 1999.

    Toyota last month slashed its operating profit forecast for the year to March 31, 2009, by 1 trillion yen ($10.98 billion) to 600 billion yen, citing weak global car sales amid tighter credit and a financial crisis. That would signify a second-half profit of less than 20 billion yen.

    Analysts expect other Japanese automakers to suffer also, as the value of their earnings made overseas erodes when converted back into yen. A top Honda Motor Co (7267.T) executive told Reuters recently that meeting its latest annual profit forecasts would be nearly impossible.

    Many analysts have not officially revised their forecasts for Toyota, but three that have updated their figures this month have put the annual operating profit at 330 billion yen or less.

    Toyota’s share price ended Friday down 10 percent at 2,760 yen.

    ($1=91.10 Yen)

    Reporting by Chisa Fujioka and Chang-Ran Kim; Editing by Lincoln Feast

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