Asian analysts polled earlier today (11 May 2010) have said the Toyota Motor Corporation 2010/11 fiscal full-year forecast announced on Tuesday was weaker than expected and suggested exchange rates may affect the automaker’s results.
Chibagin Asset Management fund manager Hiroaki Osakabe in Tokyp told Reuters: “The forecast is really quite weak compared to the consensus, but given their overall situation right now I don’t think they could really put out a strong forecast. They also see the euro rate for the next year [averaging] 125 and their forecast for global vehicle sales is really very conservative.
“Overall, this was quite conservative. I think the real impact of the recalls has already been factored in, but the consensus was also pretty high. I think there could be some selling of shares by people who bought Toyota in expectation of the results.
“I think it’s not really an issue of whether Toyota will do better than GM or Ford. After all, when you consider regular gasoline cars – not hybrids – the gasoline use of Japanese cars is quite good. There definitely was some damage [to the brand image and Toyota really had to drop prices, but it’s not as if there was any big drop in quality.
“The biggest risk that I see for the next year isn’t just limited to Toyota, it’s really more whether the global automobile market will hold up once all the rebate schemes expire. I think the impact of the recalls has been factored in for Toyota, the risk now will be much more of a macro one.”
Dongbu Securities analyst Eun-Young Yim in Seoul said: “Foreign exchange rates will be a key risk to Toyota this year. Europe’s debt problems have made the yen stronger again, which will likely slow the pace of earnings recovery at Toyota.
“Toyota has a smaller global production ratio than Hyundai’s at the early end of 40% and over 50%, respectively. That leaves it more vulnerable to forex fluctuations than Hyundai.
“But Toyota’s earnings will make a big improvement this year thanks to the effect of transferring into income part of the provisioning costs it set aside last year to protect against the falling residual values of vehicles.”
Advanced Research Japan senior analyst Koji Endo, also in Tokyo, said: “The fourth-quarter profits were slightly better than expected, while the forecast for this financial year is slightly weaker than expected.
“Their forecast for this year is very conservative. Looking at a regional breakdown of their sales forecast, they cut Japan sales sharply, which suggests they assume sales will plummet after the government’s incentive scheme ends in September.
“I suspect analysts will forecast much higher profits of around JPY400bn to JPY500bn. The company’s forecast reflects the least it thinks it can achieve.
“But this is unlikely to boost share prices. At the moment, there’s no reason to buy Toyota.”
Toyota shares closed down 0.7% at JPY3,495 ahead of the results announcement, the news agency noted.