Thursday, December 25, 2008


Toyota expects first loss in 70 years amid 'unprecedented emergency'
By Jonathan Soble in Nagoya

Published: December 23 2008 02:00 Last updated: December 23 2008 02:00

Toyota Motor warned yesterday that it would suffer its first loss in more than 70 years as the worldwide deterioration in vehicle demand took its toll on one of the best-run carmakers.
Katsuaki Watanabe, chief executive, said the Japanese vehicle maker would slash business investment, cancel executive bonuses and review its dividend pay-out as it cautioned that conditions were unlikely to improve in the short term.

"This is an unprecedented emergency," said Mr Watanabe. "Unfortunately, I cannot see now where the bottom will be."

The crisis at Toyota - for years the industry's most profitable producer - underscores the severity of a slump that has pushed weaker American carmakers to the brink of bankruptcy. President George W. Bush announced plans last week to lend General Motors and Chrysler $17.4bn to survive the next three months.

Mr Watanabe said the costcutting measures, which include a freeze on "virtually all" capacity expansion projects worldwide, were designed to allow Toyota to turn a profit on annual sales of as few as 7m vehicles.

Toyota sold 8.9m vehicles last year and entered 2008 expecting to become the first carmaker to top the 10m mark, before the credit crisis and recessions in the US, Japan and Europe caused an abrupt collapse in demand.

Yesterday, it cut its forecast for the year ending March 31 to 7.54m units, 15 per cent below last year's volume.

Moody's said it was reviewing its triple A debt rating on Toyota for a possible downgrade, following Standard & Poor's decision to review the company last week. Fitch lowered its rating from triple A last month. Toyota expects to generate an operating loss of Y150bn ($1.7bn) in the current fiscal year, reversing its forecast of a Y600bn profit.

Last year it earned a record Y2,270bn. At the net level, dividend payments from affiliates and other non-operating income are projected to generate a narrow profit of Y50bn, down 97 per cent year-over-year.

Toyota has not reported a loss since it began publishing its results in the 1940-41 fiscal year, although it said internal records showed a small loss in its first year of operation in 1937.
Mr Watanabe said he aimed to cut fixed costs by 10 per cent in the near term.

More of Toyota's 75 factories would move to single shifts and temporary shutdowns would become more frequent.

TEH : This is one of the many reports/articles I m reading regarding global economies. Please DO NOT believe our government that we will not be into recession. And do not believe that we SHOULD use our money to BUY BUY BUY.

Be prudent in our spending. SAVE is the key word. Brace ourselves.

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