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Toyota net profit plunges 28% on US slump
Published in The Saudi Gazette on 08 - 08 - 2008

Toyota Motor Corp., the world's second-largest carmaker, reported the biggest drop in profit in five years as US sales of sport-utility vehicles and trucks plunged.
Net income fell 28 percent to 353.7 billion yen ($3.2 billion), or 112.28 yen a share, in the three months ended June from 491.5 billion yen, or 153.89 yen, a year earlier, the company said in a statement on Thursday. Sales declined 4.7 percent to 6.22 trillion yen.
Operating profit in North America fell 57 percent as record gasoline prices cut demand for large vehicles, forcing President Katsuaki Watanabe to halt US production of Tundra pickups and Sequoia SUVs for three months from August. The models eroded gains from fuel-efficient vehicles that spurred an 8.1 percent increase in net income for Honda Motor Co., which doesn't make full-size trucks.
“Toyota can't escape a terrible market,'' said Fumiyasu Sato, chief executive officer of Milestone Asset Management, a Tokyo-based investment adviser. “Truck demand will keep shrinking and the shift to small cars will accelerate.''
The Tundra and Sequoia accounted for 7.6 percent of Toyota's US sales through July.
Operating profit, or sales minus the cost of goods sold and selling, general and administrative expenses, fell 39 percent to 412.6 billion yen in the quarter, Toyota said. A stronger yen cut profit by 200 billion yen. Watanabe, 66, based the company's earnings on 105 yen to the dollar and 163 yen per euro, compared with 121 yen and 163 yen, respectively, in 2007.
Toyota declined as much as 4 percent in German trading to 26.88 euros and traded at 27.15 euros as of 12:45 p.m. in Frankfurt. The Tokyo-traded shares fell 1.3 percent to 4,580 yen before the earnings announcement. The shares have fallen 24 percent this year compared with a 14 percent decline for the Nikkei 225 Stock Average and a 59 percent decline for General Motors Corp.
GM, the world's largest carmaker, and Ford Motor Co., both more dependent on trucks and SUVs, posted losses in the quarter as sales plunged and they wrote down the value of leased vehicles.
Toyota's decline in profit was limited by stronger demand for hybrids and fuel-efficient Corolla and Camry models as gasoline surpassed $4 a gallon in the US.
Operating profit at the company's financial services unit dropped by 21.8 billion yen, excluding a valuation gain from interest rate swaps, as Toyota had to write down the value of loans and leased vehicles.
The company increased its provision for leased vehicles by 9 billion yen compared with the previous year, Takahiko Ijichi, a senior managing director said on a conference call without giving the exact amount. The provision for possible loan defaults was increased by 30 billion yen.
Toyota is the latest carmaker forced to book a drop in the residual value of vehicles previously leased by its auto


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