Toyota has halved its full year profit forecast reflecting the full impact of the strong yen and supply chain disruptions triggered by the flooding in Thailand.
The company projects its full-year net profit to fall to JPY180bn (US$2.8bn) from its previous forecast of JPY390bn ($5bn) and now expects to post an operating profit of JPY200bn ($2.5bn), down from JPY450bn ($5.8bn) forecast earlier.
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The figures compare with the previous year’s consolidated net profit of JPY408bn (US$5.2bn) and operating profit of JPY468.2bn (US$6bn).
The automaker had held back from releasing a revised outlook for the year ending 31 March 2012 when it announced its first-half results in November, citing uncertainties over the disaster’s impact.
The company said its output had been reduced by a total of 230,000 units by December due to the flooding in Thailand.
Executive vice president Satoshi Ozawa told a press conference that Toyota was also doing its best to make up for the losses following the earthquake and tsunami in March.
Ozawa also voiced concern over the European financial crisis, saying it could trigger recession in the US and emerging economies and also cause the yen to rise further against their currencies. Toyota revised its assumed foreign exchange rate to JPY78 against the US dollar and JPY109 against the euro from the previously announced JPY80 and JPY116 respectively.
Ali Al-Saffar, automotive industry analyst at the Economist Intelligence Unit, said: “The revised forecast will not come as a surprise to Toyota, but the company has shown a great deal of tenacity in recovering from shocks in the past, and will most likely do so again.
“Indeed, operations in North America have already returned to pre-Thai flood levels, with dealer stock increasing by around 30,000 in November. Toyota will, however, have to fight hard, not only to maintain its spot at the top of the industry, but also to stave off increasing South Korean competition—Hyundai will benefit a great deal this year from the free trade agreements Korea recently signed with Europe and the US.”
