Surrounded by reporters, executive director Takahiko Ichiji of Japan's auto maker Toyota (C) answers questions during a press conference in Tokyo on February 7, 2012.
By Paul Eisenstein, The Detroit Bureau
Toyota's profits slid another 13.5 percent for the latest quarter reflecting the maker?s ongoing production problems and the impact of lopsided exchange rates ? but the Japanese giant also indicated that it has begun a long-awaited recovery that should see profits begun turning upward during the final three months of the Japanese fiscal year.
Toyota profits slipped to 80.9 billion, or $1.05 billion, for the October ? December quarter, down from $93.6 billion yen the year before.? Sales for the quarter were up 4.1 percent, to 4.865 trillion yen, or $63.4 billion, hinting at the maker?s slow return to normal production levels after the hammering it took as a result of the March 11 Japanese earthquake and tsunami and subsequent flooding in Thailand.
Toyota Managing Director Takashi Ijichi indicated during a conference call that sales continue returning back to normal during the current quarter.?Meanwhile, ?company-wide profit improving efforts? will help trim about 60 billion yen in costs during the fourth quarter.? As a result, Toyota raised its profit forecast for the full year to 200 billion yen, or $2.6 billion, up from 180 billion yen, or $2.3 billion, in an earlier forecast.
?We feel confident the foundation of our business is now stronger,? he said.
Nonetheless, that will still be less than half of the 408 billion yen profit Toyota reported the previous year, which concluded just weeks after last week?s Japanese natural disaster.
Toyota declined to provide a forecast for sales and earnings for the coming fiscal year but company officials have recently expressed optimism that the maker?s global production system is now back to normal.
That?s reflected by a modest rise in the number of vehicles Toyota now expects to sell for the full fiscal year, which should reach 7.410 million, up from an earlier forecast of 7.380 million.? But that is also down sharply from year earlier levels.
For the 2011 calendar-year, Toyota?s global sales slipped to just 7.9 million, a 6 percent decline.? As a result, it lost the global sales crown, plunging to fourth behind resurgent General Motors ? which saw demand rise to 9.03 million vehicles ? Volkswagen and the Renault-Nissan Alliance.
For the first three quarters of the fiscal year, Toyota reported sharp sales declines in most of its major markets, including Japan off 131,000 units to 1.357 million and North America down 280,000 to 1.268 million.?The notable exception was Europe, where sales rose by 4,000 vehicles to 580,000.
The maker is now in an aggressive catch-up mode, hoping to capture pent-up demand among Toyota loyalists who might have chosen to wait rather than switch to another brand during the product shortages of the last year.
Just this week, Toyota announced plans to ramp up production of the compact Corolla ? the company?s all-time best-selling model ? at a new plant in Mississippi.? Adding a second shift will raise output to 150,000 annually.
But industry analysts caution that Toyota should not automatically assume that it can simply regain its prior momentum.? ?I don?t buy into the idea they?ll come roaring back,? cautioned Aaron Bragman, an automotive analyst with IHS Automotive.? ?They?re going to have a fight on their hands.?
The Corolla is a good example, according to Bragman and other analysts.? It is now one of the oldest products in the segment and facing increasing competition from newer models like the Chevrolet Cruze, Ford Focus and Hyundai Elantra ? the latter having won the coveted North American Car of the Year trophy last month.
Toyota has, ever, seen a surge in demand for the new Camry model it introduced last autumn.
Complicating matters is the sharp rise in the value of the yen.? During the latest quarter it traded at 77 to the dollar, compared to 83 yen the year earlier.? Few expect exchange rates to shift in Japan?s favor any time soon.? That is forcing both sharp cost cuts and a rethinking of Toyota?s manufacturing strategy ? which has traditional emphasized production in the home market.
The increase in output at the Corolla plant emphasizes that Toyota is reluctantly shifting away from that strategy.? The maker also recently announced plans to shift production of several export models to the U.S., including the version of the Sienna minivan marketed in South Korea.
Toyota announced its latest earnings just days after rival Honda.? That maker saw its consolidated operating income for the fiscal third quarter drop 64%, to 44.2 billion yen, or $578 million ? while ?worldwide unit sales of automobiles dropped to 830,000.? Honda also offered guidance on operating profits for the full fiscal year, predicting a decline of25%, to 200 billion yen, or $2.6 billion.
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