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JAPAN: Strong yen expected to clobber Toyota quarterly operating profit - reports

By just-auto.com editorial team | 30 July 2003

Toyota Motor is likely to report an 11% fall in operating profit in the first quarter of the business year, hit by a stronger yen, Reuters reported, citing the Nihon Keizai newspaper on Wednesday.

Reuters said that, without citing sources, the paper said Japan's top car maker was likely to report a group operating profit of 330 billion yen ($US2.75 billion) for the April-June period on sales of 3.95 trillion yen, under US accounting rules.

Toyota, which is scheduled to announce results on August 5, declined to comment to the news agency on the report.

According to Reuters, the paper said that, despite strong sales both at home and abroad thanks to new vehicles such as the Wish minivan, the strength of the yen against the dollar dragged down Toyota's profit by some 50 billion yen ($417 million) during the quarter.

Reuters noted that, on Tuesday, rival Honda Motor reported a 12% fall in its quarterly operating profit due to the weaker dollar, although revenue grew 3.7% on brisk overseas sales.

Toyota will base its results on an average exchange rate for the quarter of 118 yen to the dollar, compared with 127 yen during the same period a year ago, the Nikkei said, according to Reuters.

Higher research and development spending and information technology-related expenses also eroded Toyota's profit and group net profit is expected to have fallen marginally to around 210 billion yen, as cost reductions could not make up for the negative currency and R&D impact, the newspaper report said.

Reuters noted that Toyota president Fujio Cho has said he expected the US and Japanese economies to improve in the latter half of this year, helping nudge up sales volumes above levels forecast late last year.