Published: February 4, 2010 TOKYO — Toyota said Thursday that it posted a net profit in the final three months of last year, a period before the Japanese auto giant was hit by its current global recall of millions of vehicles.
Toyota Motor Corporation. The company said it earned a net profit of 153.2 billion yen, or $1.7 billion at current exchange rates, on 5.3 trillion yen in sales.
That is up from a net loss of 164.7 billion yen in the same quarter of 2008.
The company reported strong profit gains in North America, its largest market, and Asia, one of its fastest-growing markets. For the fiscal year ending March 31, the company said it expects a smaller operating loss of 20 billion yen and a net income of 80 billion yen, revised from a previous forecast for a 200 billion yen loss.
Analysts said they are much more interested in what the company plans to do to address the current quality problems than in its past performance.
“Its inability to address safety issues is a far bigger issue than what it earned last quarter,” said Paul Migliorato, head of research at NamiNori, a research company specializing in Japanese equities in Honolulu. “Unless the company can successfully negotiate its current situation, its forecasts for the current fiscal year and next year as well are likely mere guesses.”
The earnings figures were for a period before the recent global recall of more than nine million vehicles for problem-plagued gas pedals and floor mats, which has battered the company’s sales and once-stellar reputation for quality.
Adding to its mounting woes, Toyota said Thursday that it was investigating 77 reports of braking problems with its new Prius hybrid car in Japan and another eight in North America. In the United States, the National Highway Traffic Safety Administration reported at least 136 complaints involving the brakes on the newest Prius.
Analysts warn that Toyota’s market share in the United States, its largest overseas market, could suffer greatly, reversing the impressive gains it has made on the Detroit automakers in the past years and possibly even putting it behind smaller Japanese rivals like Honda.
Goldman Sachs said the cost to Toyota from lost sales and recalls could come to $1.6 billion through March. Toyota shares have plummeted 20 percent and the company has lost more than $25 billion in market capitalization since its initial accelerator pedal recall in the United States on Jan. 21.
Toyota’s ability to contain the damage from the recall debacle will heavily depend on how quickly the company can regain consumer confidence in the United States, where it has recalled 2.3 million cars over faulty pedals.
The company has already said it suffered a 16 percent sales drop in the United States in January, compared to the same period in 2009, after halting sales last week of eight popular models, including the Camry and Corolla sedans.
Before the earnings announcement, Toyota shares fell 3.5 percent on Thursday.
Toyota’s recalls have also raised concerns at the leading debt ratings agencies.
Moody’s on Jan. 29 said the recall in the United States did not “for now” hold any implications for the company’s Aa1 rating. But the agency added that “while the medium-term impacts are at present hard to determine, they certainly have the potential to cause further downward rating pressure, especially as Toyota already has a negative rating outlook.”
Similarly, Fitch Ratings on Jan. 28 placed Toyota on “rating watch negative.”
Bettina Wassener contributed reporting from Hong Kong.
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