TOKYO — Toyota Motor said Friday that it expected its annual net profit to fall almost a third from the previous year, hurt by production disruptions after the earthquake and tsunami that struck Japan in March.
The company’s prediction of a 31 percent decline in net profit to ¥280 billion, or $3.5 billion, for the year ending in March 2012 was gloomier than expected. Analysts had been anticipating a profit forecast of about ¥422 billion, according to a survey by Bloomberg. In the same period the previous year, Toyota earned ¥408 billion.
But Toyota’s forecast also projected a robust recovery in the coming months as the automaker made headway in mending its supply chain. Though Toyota’s 17 plants in Japan escaped the disaster relatively unscathed, factory lines have been working well below capacity, as vital suppliers in the country’s worst-hit areas have raced to restart operations.
Sales for the year are expected to shrink 2 percent to ¥18.6 trillion, the company said.
Toyota reiterated that there would not be a complete recovery in global production until November. Still, there have been signs that output may be bouncing back more quickly than expected. Last month, the automaker said production would begin recovering in June in all regions of the world, a month earlier than previously announced.
Even with a recovery, Toyota is still likely to lose its title as the world’s biggest automaker by sales to General Motors and be passed by Volkswagen as well, giving up its crown after just three years. Toyota now expects to sell 7.24 million vehicles for the year through March 2012, down from 7.31 million vehicles in the previous year.
A Toyota executive downplayed the importance of global rankings.
“We don’t see it as necessary to be the largest automaker in the world,” said Satoshi Ozawa, Toyota’s executive vice president.
Toyota executives have tended to avoid tough talk about global market share, especially after the company’s embarrassing spate of recalls in 2009, saying that customer trust and safety were more important.
Also weighing on production at Toyota are electricity shortages in Japan since the accident at the Fukushima Daiichi nuclear plant. Many other nuclear power plants are being kept closed as Japan rethinks its nuclear policy, leading to concerns about a power crunch this summer, when energy use peaks. A nuclear power plant that supplies the region where Toyota’s headquarters and its surrounding factories are located was shut down in May over concerns that it was vulnerable to tsunamis.
Japanese automakers, together with other manufacturers, are being asked to reduce their electricity use 15 percent this summer. Toyota officials have said they will do their best to cut electricity use, moving some shifts to the weekends to avoid peak times.
On top of the physical disruptions wrought by the earthquake, the strong yen continues to hurt Toyota earnings by blunting its competitiveness overseas and eroding overseas profits when repatriated into the home currency. The dollar has been trading at about ¥80, down from close to ¥95 a year ago.
The higher costs of producing cars in Japan has raised the question of how long Toyota can continue to base so much of its production in its home country.
Even compared with its peers, Toyota stands out in the number of cars it still manufactures in Japan, then ships overseas — a setup that has become a drag on its profitability. In 2010, Toyota made 43 percent of its cars in Japan, while Nissan made 28 percent and Honda 27 percent.
Akio Toyoda, Toyota’s president and a member of its founding family, has repeatedly said the company remains committed to keeping production and jobs inside Japan. But Friday, Mr. Ozawa hinted that Mr. Toyoda’s thinking might be changing.
The disruption caused by the earthquake and the strength of the yen had helped to remind Mr. Toyoda recently that his automaker was a global company, not just a Japanese company, Mr. Ozawa said.
“Someone told me the other day that Toyota manufacturing is not owned by Japan. When it’s put like that, I struggle to answer,” Mr. Ozawa quoted Mr. Toyoda as saying.
Article source: http://www.nytimes.com/2011/06/11/business/global/11toyota.html?partner=rss&emc=rss