gunler gunlerin ardindan: Toyota operating profit plunges 32% on supply constraints

Toyota operating profit plunges 32% on supply constraints

Automaker withdraws full-year forecast

November 8, 2011 - 3:51 am ET

TOKYO (Reuters) -- Toyota Motor Corp. posted a 32 percent drop in quarterly operating profit and withdrew its full-year profit forecasts as Thai floods pose a fresh threat to production while supply shortages from the March earthquake kept output low.

Toyota said today its operating profit for July-September was 75.39 billion yen ($966 million). Second-quarter net profit was 80.42 billion yen, down 18.5 percent, while revenue fell 5 percent to 4.57 trillion yen.

The automaker also is grappling with the stronger yen, which is making its annual exports of 1.5 million vehicles from Japan unprofitable and less competitive against cars from rivals such as Hyundai Motor Co.

Once the world's most envied and profitable automaker, Toyota has lost its shine against domestic rival Nissan Motor Co. Nissan last week lifted its profit forecasts as it achieves strong sales growth in developed and emerging markets with popular new models.

Toyota acknowledged today that its rival may have proven more adept at dealing with supply-chain issues such as those triggered by the Thai floods.

"I can't deny that Nissan may have done some things right, given the outcome of how they recovered from both the earthquake and the floods," Toyota CFO Satoshi Ozawa told a news conference. "If there's something there to learn from, we'd like to do that."

Toyota's quarterly operating profit of 75.39 billion yen fell below analysts' average expectation of 101.3 billion yen, according to a separate Reuters survey of 12 analysts.

For the fiscal year that ends March 31, 2012, Toyota had forecast an operating profit of 450 billion yen, but it withdrew its full-year forecasts for profit and vehicle sales due to uncertainty surrounding the Thai floods.

Analysts, on average, were predicting Toyota would generate an annual operating profit of 486 billion yen, according to a a survey of 21 analysts by Thomson Reuters.

Flood problems

The Thai floods have forced Toyota to halt work at its three vehicle plants in its Southeast Asian export hub from October 10 at least until November 12. A shortage of parts has also forced it to reduce production in nine other countries including Japan.

The Thai disaster has cost Toyota about 150,000 units of lost production from Oct. 10 to Nov. 12, according to the company.

"There is only so much they can do to make up for the losses from the Thai floods" as Toyota was producing at full capacity to make up for output lost to the Japan earthquake, said Koji Endo, an auto analyst at Advanced Research Japan who estimates that a three-month disruption may cut the automaker's operating profit by 200 billion yen.

Toyota said today it would keep its Japanese production reduced at least until November 18. It was still undecided on production elsewhere, including in Thailand.

This week, its Japanese factories were working at 70-80 percent of planned levels, while output in the Philippines, Malaysia, Indonesia, Vietnam and Pakistan was at 40 percent of plans.

Its North American factories, excluding Mexico, were working at 90 percent of plans.

Toyota had just started to ramp up production in September, working overtime and some weekends to make up for output lost after the March 11 disasters.

Supply constraints

The supply constraints from the two disasters have hit Toyota's sales and market share the world over and will likely place it behind General Motors Co. and Volkswagen AG this year. Toyota is still by far the most valuable, with a market capitalization of $113 billion.

But the setback could be short-lived, analysts said, since unlike Honda, its own factories in Thailand were not affected.

"In assessing the impact of the Thai floods on Toyota, we're talking about the people that supply their parts, rather than Toyota itself," said analyst Endo. "So this disaster looks to be a short-term setback for them rather than a long-term one."

Earlier today, Ozawa gave three detailed steps that Toyota hopes will help to offset currency losses and keep its commitment of building at least 3 million vehicles annually in the shrinking Japanese market without bleeding profits.

It aims to sell more vehicles in Japan, bringing the ratio of domestic sales to exports from around 1.7 million to 1.3 million now, to 1.5 million each. It will also try to reduce the number of engines and transmission units it ships out of Japan, and will redesign components to allow its suppliers to use more materials in local markets outside Japan.

Toyota's shares have fallen 22 percent in the year to date, faring worse than Nissan, which is down about 8 percent, but better than Honda Motor Co., which has fallen 28 percent.