Toyota Posts First Yearly Net Loss in 59 Years
By Brendan Moore
The world’s biggest automaker, Toyota, announced a $4.4 billion USD loss for the 2008-2009 fiscal year, and also stated that they expect to lose $8.6 billion in the 2009-2010 fiscal year as well.
Toyota went from record profits last year to their first loss ever, and all in 12 months. Toyota’s sales have plummeted in the US and Japan, the automaker’s two biggest markets, and have even dropped in China, a market that has seen healthy gains while the rest of the global market is receding.
The president of Toyota, Katsuaki Watanabe, said that the company was slow to act, and should have reduced capacity more quickly. “Of course the external environment doesn’t help, but we were lacking in the scope and speed of dealing with various problems and issues, and for that I am sorry,” he stated to reporters.
Watanabe’s forecast of future sales results was short on details, and seemed to be overly pessimistic, leading to the inescapable conclusion that either Toyota is sandbagging and making sure they exceed expectations in the near future, or, there is even more weakness in the company that outsiders are unaware of at this point. Toyota is forecasting a further 14% drop in sales during the 2009-2010 fiscal year.
Whatever the reason for the forecast, Toyota’s public statements made the ratings agency Standard and Poor push the long-term debt ratings of Toyota down to AA from the previous AA+. Standard and Poor also now considers Toyota to have a negative outlook going forward, as opposed to their previous positive outlook.
Every automaker is suffering during this downturn; Toyota is certainly no exception. However, the China results are troubling – sales dropping in a market that is going up is a bad sign. Even though China is a very small part of their global sales, there is no doubt that Toyota will do their best to solve that puzzle.
Toyota is still the number one auto producer in the world in terms of sales, and given the meltdown by GM, that doesn’t look to change anytime soon. Still, the sober statements coming out of Toyota clearly show that they’re worried about sales and financial results in the immediate future.
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