Toyota Braces for 73.6 Pct Plunge in Operating Profit

Tokyo, Nov. 6 (Jiji Press)--Toyota Motor Corp. <7203> said Thursday it expects its group operating profit for fiscal 2008 to tumble 73.6 pct from the previous year to hit the worst level since it adopted U.S. accounting rules in fiscal 1997, due to the worsening financial crisis and the yen's recent surge.

The top Japanese automaker sharply cut its operating profit
estimate for the year ending next March to 600 billion yen from 1.6 trillion
yen previously estimated, blaming the acute downturn of the key U.S. auto
market following the meltdown of the country's housing loan sector.
Toyota now projects that its net profit will fall 68.0 pct to 550
billion yen, less than half its previous forecast of 1.25 trillion yen.
Sales are expected to fall 12.5 pct to 23 trillion yen, down from
the previously estimated 25 trillion yen.
"The business climate is getting tougher by the day and by the
week," Executive Vice President Mitsuo Kinoshita said in a press conference.
He explained that the financial crisis has deepened over the past three
months, with the collapse of Lehman Brothers and the plunge of stocks and
the dollar against the yen, while U.S. new vehicle sales hit their worst
level in October in more than 25 years.
Toyota slashed its global vehicle sales forecast for the current
year to 8.24 million units, down from 8.74 million units projected in August
and down 7.6 pct from the previous year. North American sales are expected
to slow to 2.42 million units, down from the previously targeted 2.63
million units and down 18.2 pct from a year earlier.
Vehicle sales in Japan are estimated at 2.08 million units, down
4.9 pct year on year.
The sluggish vehicle sales are expected to shave 610 billion yen
off Toyota's operating balance, while the yen's appreciation is expected to
have a negative impact of some 690 billion yen.
Toyota's new full-year estimates mean that the company plans to log
almost no profit in the October-March second half.
"Honestly, it is hard to predict when the U.S. market will
stabilize," Kinoshita noted.
In the first half, which ended in September, operating profit
dropped 54.2 pct from a year earlier to 582,068 million yen, while net
profit came to 493,469 million yen, down 47.6 pct. Sales slipped 6.3 pct to
12,190,405 million yen.
Illustrating the severe slowdown of the U.S. market, Toyota
incurred an operating loss of 34.6 billion yen in its North American
operations.
Faced with an unprecedented crisis, Toyota has created a special
committee to thoroughly review all plans to build new factories and other
projects in order to reduce costs and maximize sales, Kinoshita said, adding
that specifics have yet to be finalized.
Kinoshita revealed that the number of fixed-term employees working
at Toyota's domestic factories is due to decline to about 3,000 by the end
of next March, or a third of the peak level, since the company will no
longer renew contracts with existing fixed-term workers and will not hire
anew.
But Toyota does not see it laying off regular employees in the
foreseeable future, he said.
He also said that the company is likely to slash its capital
spending in the fiscal year starting next April.
The automaker assumes an exchange rate of 103 yen to the dollar for
the current year, down from a previously estimated 105 yen, and 146 yen to
the euro, down from 161 yen.
"We hope to see the market showing an upward move toward the end of
next year," Kinoshita said about the U.S market.