Another year before the red ink stops flowing, according the the family scion.
Toyota Motor Corporation lost more than $815 million in the first quarter of its fiscal year, as revenues declined 38% when compared with its first quarter of last year.
The swing into negative numbers was breathtaking. Net income attributable to Toyota Motor Corporation decreased from ¥353.6 billion to a loss of ¥77.8 billion or $4.52 billion. Major factors for the decline include ¥650 billion due to the effects of declining sales volume and mix, and ¥140 billion due to the appreciation of the Japanese Yen, mainly against the U.S. dollar and the Euro.
Critics have maintained for years that the Japanese government manipulates the value of the Yen to subsidize its export driven economy, but the global Great Recession has upset that equation.
“Although we were able to make certain improvements in fixed cost and cost reduction efforts, the decline in vehicle sales and the appreciation of the Japanese yen had a severe impact on our earnings,” said TMC Senior Managing Director Takahiko Ijichi.
Consolidated vehicle sales for the first quarter amounted to 1.4 million units, a decrease of 785,000 vehicles from the same period last fiscal year. Roughly speaking that’s the equivalent of three final assembly plants working full time, to say nothing of the stamping and component plants that support them.
Nevertheless, the world’s largest automaker upped its full year forecast to net revenues of ¥16.8 trillion, but still with an operating loss of ¥750.0 billion, a loss before income taxes and equity in earnings of affiliated companies of ¥700.0 billion and net loss of ¥450 billion, or $4.7 billion. These projections are based on the assumption of the foreign exchange rates: ¥90:$1, ¥130:€1.
During the quarter the sales declines were across the globe:
- In Japan, vehicle sales were 407,000 units, a decrease of 105,000.
- In North America, vehicle sales were 387,000 units, a decrease of 342,000.
- In Europe, vehicle sales were 213,000 units, a decrease of 88,000.
- In Asia, vehicle sales were 194,000, a decrease of 68,000.
- In the “Other” region that includes Central and South America, Oceania, Africa and the Middle East, vehicle sales were 200,000 units, a decrease of 182,000.
Operating income in all regions declined due to Toyota’s inability to counter the overall market slump with effective sales or marketing campaigns. Operating loss in Japan was also particularly significant, as a result of lower export profitability due to the appreciation of the Japanese Yen. As a result, Toyota has stepped its “Emergency Profit Improvement” activities from ¥800 billion yen to ¥900 billion.