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March 31, 2003

SOUTH AFRICA: Weak rand hits Toyota profitability – report

According to the country’s Business Day website, Toyota South Africa grew significantly to become a 10.7 billion rand company last year but was hit so badly by the weak currency in the first part of the year that it failed to make a profit. Business Day said interim results reported by Wesco, which last year reduced its stake in Toyota SA from 64% to 25% in a billion rand deal with the Japanese parent firm, show that turnover jumped 27.8% in 2002 from R8.4 billion to R10.7 billion.

By bcusack

According to the country’s Business Day website, Toyota South Africa grew significantly to become a 10.7 billion rand company last year but was hit so badly by the weak currency in the first part of the year that it failed to make a profit.

Business Day said interim results reported by Wesco, which last year reduced its stake in Toyota SA from 64% to 25% in a billion rand deal with the Japanese parent firm, show that turnover jumped 27.8% in 2002 from R8.4 billion to R10.7 billion.

There was a marginal improvement in market share from 22.6% to 23.1%, the report said, although sales fell from 83,059 vehicles to 80,777 units.

“A loss of R126 million was recorded (for Toyota) for the 12 month period, with the latter six months showing an improvement as anticipated,” Wesco reported, according to Business Day.

The report said that Toyota SA chief executive Johan van Zyl explained that Toyota’s lack of profitability last year had been expected, and was largely due to the weakness of the rand.

“Although we put up our prices, we could not catch up with the deteriorating currency not just last year, but in previous years,” he told Business Day. “However, the recovery of the rand towards the end of last year helped, and if things continue as they are, we will return to profitability this year.”

He also noted that the value of Toyota’s local content was also hit by the deteriorating rand, which resulted in the company paying more in duties.

Business Day said Toyota began an ambitious export programme this month, with its first shipment of Corollas to Japan. This is likely to be followed by car and bakkie (pickup) exports to other markets.

According to Business Day, Wesco said substantial investment in Toyota SA “is expected to return the company to profitability in the medium term.”

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