September 21, 2021

Toyota Raises Profit Forecast on Rebounding Sales

Toyota said net profit came to ¥99.9 billion, or $1.1 billion, in the three months through December, a 23.5 percent increase from a year earlier, when the effects of Japan’s tsunami disaster still weighed on its business.

Sales for the quarter climbed 26 percent from a year earlier to ¥16.2 trillion, helped by an almost 50 percent surge in sales of the company’s fuel-efficient vehicles in the United States. Meanwhile, cost reductions at an automaker already known for its lean production saved the company ¥320.0 billion during the quarter, Toyota said in a statement.

Now Toyota, whose Super Bowl ad “Wish Granted” topped viewership rankings, is set to get a wish of its own: the weaker yen brought about by the economic policies of Prime Minister Shinzo Abe, who took office late last year, is set to lift Toyota’s bottom line even further.

A weak currency helps Toyota because it lowers the cost of producing in Japan, and inflates the yen value of overseas profits. Toyota is poised to get a particularly big boost from the weak yen, because it manufactures more cars at home than its domestic rivals. Last year, Toyota made 53 percent of its vehicles in Japan, and exported over half of those cars.

Toyota shares have risen by almost 50 percent since mid-November, when the yen started to weaken. The currency has weakened by about 15 percent over the same period.

In 2013, Toyota expects to sell 9.91 million vehicles, improving on its record of 9.75 million for last year, which helped it regain its crown as the world’s top-selling automaker from General Motors. Those sales figures include Daihatsu Motor and Hino Motors, which are part of the Toyota Group.

Such a performance could help Toyota climb back closer to the ¥1.7 trillion in net profit it booked in 2008, before the global financial crisis decimated its earnings. Since then, a recall scandal, natural disasters and a strong yen had hindered a full comeback. But the combined challenges have also forced executives at the 75-year-old automaker to revamp quality control, cut costs and take more risks with design to attract new audiences.

“We believe that our efforts have been bearing fruit,” Toyota senior managing officer Takahiko Ijichi said in Tuesday’s statement. “We are finally on the road to sustainable growth.”

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Mortgages: Mortgages

In a forbearance program, a lender agrees not to foreclose on a property and gives a borrower several months’ grace from or reduction in monthly mortgage payments. The programs work best for temporary setbacks, like job loss, health problems or natural disasters.

Along with the reprieve come drawbacks — most significantly a larger total debt from the smaller payments. “Your unpaid balance keeps getting higher and higher and higher,” said Jennifer Murphy, the director of lender-servicer relations for the nonprofit Center for New York City Neighborhoods.

The new temporary mortgage payment is often set to 31 percent of your household income; in some cases lenders agree to accept no payments. Fannie Mae’s extended unemployment program, first offered in the fall of 2010, limits any nonpayment or other forbearance plans to one year, with the second six months requiring its approval as well as the lender’s.

But even with the program in place, your lender could still report a mortgage as delinquent, which would adversely affect your credit, so ask about its policy, said Martha Cedeno-Ross, a foreclosure assistance counselor with Neighborhood Housing Services of Waterbury, Conn. Because some agreements may add onerous terms and conditions, homeowners should also consult with a real estate lawyer, or a housing counselor certified by the Department of Housing and Urban Development.

Some 26,801 homeowners completed Fannie Mae loan forbearance and repayment plans in the first nine months of 2011, up 13 percent from the same period in 2010. By comparison, the total for all of 2008 was 7,892, according to Fannie Mae’s financial filings with the Securities and Exchange Commission.

To qualify, borrowers must be unemployed, which means not working at all, though a co-borrower could still be employed, said Brad German, a Freddie Mac spokesman.

To get started, gather up your financial information and consider writing a “hardship letter,” an overview that clearly states what happened and when, Ms. Cedeno-Ross said. The letter could also serve as a starting point for a loan modification and other programs. Give details about your previous salary, severance payments and unemployment benefits; if you have had job interviews, include those details, she said.

You will need to fill out the four-page uniform borrower assistance form used by both Freddie and Fannie, Mr. German said. It is also good for government mortgage assistance programs like Making Home Affordable — — and

Be sure to plan an “end strategy” well before the forbearance agreement runs out.

“The big question every homeowner should find out: Where will this forbearance lead me?” said Charles Das, a housing counselor for Brooklyn Housing and Family Services. Homeowners usually get a repayment plan or a loan modification, he said, but he has seen some denied the modification because of low income.

Ms. Murphy says homeowners should use the 6 to 12 months of reduced payments to work with a financial or housing counselor, and if possible, save money and pay off secured debts.

Sometimes borrowers may determine after counseling that they cannot afford the home, said John Walsh, the president of Total Mortgage Services of Milford, Conn. They may then need to sell the home or arrange for “a graceful exit” — for instance, agreeing to give up the deed in lieu of foreclosure, or pursuing a short sale, in which the lender agrees to accept less than the mortgage balance.

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Stocks & Bonds: American Stock Markets End 2011 Where They Started

The Standard Poor’s 500-stock index, the main gauge of broad market performance, closed on Friday at 1,257.60, finishing the year nearly dead even with its 2010 close of 1,257.64, which is technically down 0.003 percent. The Dow Jones industrial average of 30 blue-chip American stocks fared better, closing the year with a 5.5 percent gain at 12,217.56.

Market strategists predict the S. P. will stay in a range of 1,100 to 1,500 by the end of 2012, depending on how investors balance economic growth, fiscal policy, corporate earnings and the European debt crisis, as well as the potential for change after the November election.

Yet, looking back at 2011, it was a flat finale that told little of the volatility preceding it, when political turmoil, financial upheaval and even natural disasters left almost no corner of the markets untouched.

On 35 trading days in the year, the broader market closed with a gain or loss of 2 percent or more — the most number of days of that magnitude since the financial crisis of 2008-9 and making 2011 among the most volatile on record for stocks.

“It has been such a difficult year,” said Rick Bensignor, the chief market strategist for Merlin Securities. “Things changed on a dime.”

Oil prices shot up to $114 a barrel before plunging to $76 and rising again to $100 in reaction to revolutions in the Middle East and North Africa. Investors piled into the perceived haven of United States Treasury bonds even after the nation’s credit rating suffered its first-ever downgrade. The earthquake and tsunami in Japan exacted a devastating human and economic toll.

And the debt crisis in Europe upended governments, stirred fears of sovereign defaults and imposed severe financing strains on banks. Possibilities that were once remote became questions for debate in 2011: Will the euro zone break up? Is this a replay of the 2008 financial crisis?

Sentiment was also hobbled by a deadlock in Washington over fiscal policy and by the potential for slowing growth in emerging markets.

“Investors are scared to death,” said Philip J. Orlando, a chief market strategist for Federated Investors. “You have a massive flight to safety.”

Despite the bruising it took in 2011, Wall Street managed to score one of the better global performances. Major European and Asian indexes lost anywhere from 6 percent (Britain) to 26 percent (Italy) for 2011.

Looking ahead, some analysts see the United States faring even better in 2012. Binky Chadha, the chief strategist for Deutsche Bank, who forecast that the S. P. 500 would end closer to 1,500 in 2012, wrote in a market commentary that “very healthy” corporate fundamentals and cheap valuations would help equities eventually win out over the euro crisis and American fiscal issues.

Some analysts said investors would most likely be better braced to handle policy changes in the nations that use the euro.

“Investor reaction should continue to get better,” said Jack A. Ablin, chief investment officer of Harris Private Bank. “For as lousy as Europe’s news is, it has got to be the slowest moving train wreck in the history of the financial world. It’s the stuff that comes over the transom that kills us.”

Among the best 2011 performers in the S. P. 500 were utilities, up 14.8 percent; health care, up 10.2 percent; and consumer staples, 10.5 percent. The financial sector fared the worst, finishing down 18.4 percent.

Macroeconomics ganged up on market sentiment this year to such an extent that investors backed off stocks even as American companies set records for profits, mostly via cost-cutting.

In the third quarter, for example, earnings per share for companies in the S. P. 500 were $25.29, their highest ever for a quarter, according to statistics compiled by Standard Poor’s. But in an “enormous disconnect,” said Howard Silverblatt, senior index analyst for S. P., the index was still down 14 percent in that period.

“The fundamental underpinnings of investing didn’t matter” in 2011, Mr. Ablin said. “All it took was one headline and just like a tidal wave, it was lapping across the market.”

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Wealth Matters: Sticking by Rosy Predictions for the Stock Market

This is fairly remarkable given what the first quarter brought: natural disasters, serious problems at a Japanese nuclear reactor and revolution and unrest in the Middle East. That politicians in the United States are bickering along party lines, with the budget hanging in the balance, seems trivial by comparison.

“If we had all sat down in January and predicted we’d have turmoil in the Middle East and Africa, a devastating tsunami in Japan, an earthquake in New Zealand, housing continuing to go down, oil over $100 a barrel and policy makers still fighting with each other, we might have been tempted to say that 1,400 for the S. P. looked aggressive,” Marc Stern, chief investment officer at Bessemer Trust, said of his year-end stock index prediction. “But the market hung in there well because of corporate earnings.”

Richard Madigan, chief investment officer for J.P. Morgan Private Bank’s global access portfolios, was equally impressed with how the stock market weathered this spate of shocks. “It’s staggering what we saw and how well behaved the market was,” he said. “I don’t believe the markets would have behaved as well as they had over the past three months if investors were fully invested.”

That was the silver lining for those who analysts who made bullish calls. Many people were still hesitant to invest their cash despite predictions that the stock markets would rise steadily this year.

Back in January, Mr. Stern predicted as much, saying that stocks would have to rise more before most investors would buy equities again.

To one contrarian, waiting on equities is not a bad thing with the prospect of inflation still low. “Domestically, you don’t have the source of factors to create inflation,” said Richard Cookson, chief investment officer at Citi Private Bank. “You have broad monetary policy crawling along. You have a situation where unemployment or underemployment is extremely high. You don’t have the ability for employees to gouge more from their employers.”

So with the second quarter under way, let’s see what our group sees for the rest of the year.

CONSENSUS The big debate when I spoke to this group in January was over whether the time was right to move money from bonds to stocks. With the exception of Mr. Cookson, the consensus was that it was.

Those beliefs are even firmer now. “It is important to point out that stocks have not been this cheap to bonds since 1980,” said Niall Gannon, director of wealth management at the Gannon Group at Morgan Stanley Smith Barney. “We see a global equity strategy focused on where the earnings are produced.”

To that end, he treats Japanese equities like American companies because the United States consumes so many Japanese products, while he considers Nike a non-American company because only 25 percent of its earnings come from sales here.

Some suggestions for variations on stocks have not fared as well.

Bill Stone, chief investment strategist at PNC Wealth, said he favored dividend-paying stocks in January but admitted that they performed better in February when the stock market lost some value than they did when the market was strong.

Still, he said he believed that Cisco Systems announcing its first dividend ever in March was a sign that such stocks could come back in vogue. “It’s still a nice play in risk-reward terms,” he said. “I think we’re at the very beginning of the reallocation into equities, and that makes it attractive.”

Mr. Stern said he continued to believe that convertible bonds were right for people who want more return but were still hesitant about putting a lot of money into equities. “If the stock went up 25 percent, the convertible bond could go up 12 to 15 percent,” he said. “If the stock went down 25 percent, the convertible bond would roughly break even.”

SURPRISES Beyond the earthquake and tsunami in Japan and the unrest in the Middle East, there were other unexpected changes.

On the positive side, the unemployment rate has dropped to 8.8 percent. Mr. Madigan had predicted that it would hover around 9 to 10 percent for the foreseeable future. “I’m thrilled that I was wrong,” he said. But he said he did not think there would be real economic growth until employees were paid more.

The worries about a wave of municipal bond defaults seem to have been overdone — or at least premature. Mr. Gannon said his group created a model with a 2 to 3 percent default rate for the year, but he now sees that as too high. And even if that default rate occurs, he said it would not have a huge impact on portfolios with higher-grade municipal bonds.

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