Toyota May Report 2nd-Half Operating Loss, Asahi Says

By Stanley White

Dec. 13 (Bloomberg) -- Toyota Motor Corp., Japan's largest automaker, may report an operating loss of at least 100 billion ($1.1 billion) in the fiscal second half as a global recession and a strengthening yen crimp sales, the Asahi newspaper said.

Losses in the October-March period may reduce the automaker's full-year profit by 80 percent or more, forcing the company to lower its earnings forecasts, the Asahi reported, without citing anyone. Calls to the company's offices in Tokyo and Toyota City, Japan weren't answered.

The maker of Corolla cars last month forecast the biggest drop in profit in at least 18 years as a global slump cripples auto demand and gains in the yen erode the value of overseas sales. President Katsuaki Watanabe predicted the smallest profit in nine years as higher fuel costs and the credit crunch hurt vehicle sales in the U.S., the world's largest auto market.

Toyota said on Nov. 6 it expects operating profit to plunge 74 percent this fiscal year to 600 billion yen, which is also down 63 percent from its previous forecast.

Car sales last month may have fallen more than expected, the newspaper said. The yen's 23 percent gain against the dollar and 34 percent rise against the euro this year will also erode overseas earnings, according to the newspaper.

The dollar traded at 91.07 yen at 4:27 p.m. in New York, compared with 91.45 yesterday, after dropping as much as 3.2 percent to 88.53, the lowest level since August 1995. The euro

Output Cuts

Sales in the U.S., traditionally the company's most profitable market, plunged the most in 28 years last month as the recession forced consumers to cut spending. Auto sales in the U.S., the world's largest auto market, fell to the lowest annual rate in 26 years last month. Toyota's sales slipped 34 percent.

Domestic sales plunged 28 percent in November, as industrywide sales dropped to the lowest tally in 39 years for the month. Toyota sold 83,000 vehicles in Europe in October, down 14 percent from a year ago. In the first 10 months of this year, European sales dropped 6.4 percent.

In response, the company is also cutting output. Toyota, which opened its seventh North American auto assembly plant last week, said it plans to further reduce production at factories in the U.S. and Canada. It halted production of Tundra pickups at its San Antonio plant for more than three months.

The company is eliminating nine days of output by extending an annual holiday shutdown at its Georgetown, Kentucky, facility and closing the location for two additional days in January, the company said Dec. 5.

Holiday shutdowns are also extended at a plant in Fremont, California, that Toyota shares with GM and at plants in Cambridge and Woodstock, Ontario, the company said.

To contact the reporter on this story: Stanley White in Tokyo at swhite28@bloomberg.net