Toyota Motor Corp posted a bigger-than-expected 28 percent drop in quarterly net profit due to a stronger yen and sliding U.S. sales, and forecast its first annual profit decline in seven years.
The world's biggest automaker is expanding rapidly in China, Russia and the Middle East to try and counter a slowdown in the mature markets of the United States, Japan and Western Europe.
But a fall of more than 10 percent in the dollar against the yen in the past year, a weak U.S. auto market and rising commodity prices are outweighing its growth in global sales and efforts to contain costs.
The maker of the Yaris subcompact and Prius hybrid expects this year's net profit to sink 27 percent to 1.25 trillion yen (12 billion U.S. dollars), its first fall since 2002, and operating profit to decline 30 percent to 1.6 trillion yen.
Analysts said the outlook would weigh on Toyota's shares, which had rallied as much as 15 percent since touching a near three-year low last month.
"The operating profit forecast for this year is way below what the market expected," said Tatsuo Yoshida, an analyst at UBS Securities. "If you consider that management had said just three months ago that it would try to increase profits at a 105-yen dollar, this is a major turnaround."
Toyota is now assuming an average exchange rate of 100 yen to the dollar and 155 yen to the euro for this business year. The dollar averaged around 114 yen last year and the company says each 1 yen gain against the dollar cuts annual operating profit by about 40 billion yen.
Source: Xinhua/Agencies
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