Toyota has reported its first quarterly loss in two years after the earthquake and tsunami in March decimated production while the yen’s rise hit profits on exports.

The carmaker made an operating loss of JPY108bn (US$1.4bn) in the April-June quarter, compared to a JPY211.7bn ($2.7bn) profit a year earlier. Net profit of JNPY1.2bn ($15m) compared to JPY190.5bn ($2.4bn) the previous year.

For the full fiscal year to 31 March 2012, Toyota raised its forecast for operating profit, which excludes earnings from China, to JPY450bn (US$5.8bn).

The company reported that supply constraints from the March disaster have eased faster than initially feared but the dollar’s drop, far below the JPY82 that Toyota had assumed for the year, will further hit profits as exports account for more than half of its vehicles produced in Japan.

Toyota has been trying to cut costs by around 30% but, with the dollar around JPY77.7, company executives had warned that keeping as much production capacity as it has in Japan was illogical, although they have stopped short of suggesting a politically sensitive shift overseas.

The company said it now assumes a dollar rate of JPY80 instead of JPY82 this financial year, and the euro at JPY116 instead of  JPY115.

Toyota said it will continue to lower the cost structure of its domestic operations while keeping annual production at 3m vehicles in Japan in the interest of protecting jobs and manufacturing in the country.

TMC senior managing officer Takahiko Ijichi said: “In Japan and North America where the effects of the earthquake were particularly serious, vehicle sales declined substantially. In the Asia region, despite the impact of the earthquake, we were able to maintain a similar level of vehicle sales as the previous year in countries led by Indonesia.”

In Japan, vehicle sales totalled 292,000 units, a decrease of 208,000 compared to the same period last fiscal year. In North America the company sold 276,000 vehicles, a decrease of 250,000.

European sales totalled 174,000, down by 13,000 and Asia fell 26,000 vehicles to 259,000 during the quarter.