Toyota predicts historic loss

Car giant Toyota predicted the first annual loss in its history today.

The Japanese company forecast an operating loss of 150 billion yen (€1.19bn) for the financial year ending next March – the first such loss since it began reporting operating figures in 1941.

Operating income reflects a company’s core business performance and does not include income taxes and certain other expenses. Last financial year Toyota had an operating profit of 2.27 trillion yen (€18bn).

The surging yen has battered profits by eroding overseas earnings.

“The change that has hit the world economy is of a critical scale that comes once in a hundred years,” company president Katsuaki Watanabe said.

The drop in vehicle sales over the last month was “far faster, wider and deeper than expected.”

The company also lowered its net profit forecast to just 50 billion yen (€390m) for the year through March 2009.

It is the second time Toyota reduced its annual earnings forecast this year.

It also lowered the number of vehicles it expects to sell globally to 8.96 million, down 4% from a year ago.

While Japan’s car makers are in far better financial shape than their cash-strapped American counterparts, the global slowdown is hitting them hard.

“The crisis we face now is totally different from past crises,” said Mr Watanabe.

At a similar news conference last week Honda president Takeo Fukui, also lowered profit and sales forecast and declined to give a vehicle sales goal for 2009.

Toyota said it will cut thousands of temporary workers at its Japanese plants, but said their full-time employees will have job security.

Toyota is a relatively old-style Japanese corporation that offers lifetime employment, and in only recent years has hired and let go of temporary workers to adjust production.