Topic: Toyota reveals first annual loss in years - 7.7billion

[drederick]

http://www.ft.com/cms/s/0/54e38034-3b93-11de-acbc-00144feabdc0,s01=1.html?nclick_check=1

OUCH

Toyota reveals first annual loss in years
By Jonathan Soble in Tokyo

Published: May 8 2009 07:21 | Last updated: May 8 2009 09:31

Toyota Motor revealed a Y766bn ($7.7bn) net loss for the quarter to March on Friday – a bigger deficit than US rival General Motors’ – and warned that it would remain deeply unprofitable in the current financial year.The automaker, which like other Japan-based manufacturers has been hurt by a stronger yen as well as plunging worldwide demand, said it expected to sell 6.5m cars and trucks in the year to March 2010, a million fewer than last year.

Just a year ago Toyota was celebrating record profits as it climbed past GM to become the world’s largest car producer, a position it has kept only thanks to even sharper declines in sales and output at its teetering US rival.

The size of Toyota’s projected net loss this year, at Y550bn, took analysts by surprise. Its Y437bn loss for the full year to March – the first for the company since a crisis following the second world war – was also larger than expected. Toyota itself had warned of a Y350bn deficit.

Toyota’s performance compared unfavourably with that of Honda, its smaller Japanese rival, which lost Y1.9bn in the latest quarter but expects to make money this year because of its focus on better-selling compact cars and motorcycles. GM lost $6bn in the quarter and Ford reported a $1.4bn loss.

GM warned this week that prolonged uncertainty over its financial condition risked creating a ”vicious circle” of falling sales and production of its cars.

[toolatecrew]

Those are big losses.

When you are growing growing growing and making a profit while doing it it obviously puts you in a position where you need a certain volume to break even.

The key for all companies will be the ability to reduce capacity to meet demand while still turning a profit.

I would expect that companies who were doing well before the slump in worldwide autosales will start doing well again when sales start to rise again (as they ultimatley will) I expect the companies that were losing billions for years when sales were at an all time high are the ones in real trouble going forward.

[dorin]

So Toyota lost $7.7B this past quarter, but only lost $5.5B for the entire past fiscal year (meaning that it had a profit of $2.2B for the first three quarters).  Is it notable?  Yes.  Is it a big deal?  Not yet.

Toyota has been very profitable up to this last quarter.  The real question now is can it adjust?  If it loses money for a few more quarters and then gets back on track, then this is just a blip that hopefully teaches Toyota a lesson to simplify its product line.  Toyota has quite a few quarters to go before it becomes systemically unprofitable like the D3 and this is a serious warning.  However at this point it's just a warning.

[barrie1]

Figures in yesterday's or Fridays  London Free Press stated the no. was up to 8.5 Billion in loss's. New revised numbers. This was the latest news statement from Toyota head office in Japan. 

[Squishy]

Just a year ago Toyota was celebrating record profits as it climbed past GM to become the world’s largest car producer, a position it has kept only thanks to even sharper declines in sales and output at its teetering US rival.

Does this mean that VW did not overtake Toyota for the top spot?  I couldn't find any articles past those 'VW could overtake Toyota' ones.

[dr_spock]

Sales number aren't that great at VWOA either:

[rrocket]

So Toyota lost $7.7B this past quarter, but only lost $5.5B for the entire past fiscal year (meaning that it had a profit of $2.2B for the first three quarters).  Is it notable?  Yes.  Is it a big deal?  Not yet.

Yea..not a real big deal...YET.  Some of Toyota's competition lost $31 Billion during that same time span...and 2 of those are nearly bankrupt.....

As others said...It will be interesting to see what Toyota does next.

[Leviathan]

As others said...It will be interesting to see what Toyota does next.

Toyota Slashes Capital Spending, R&D Spending Amid Losses

Toyota Slashes Capital Spending, R&D Spending Amid Losses
Dow Jones
May 08, 2009: 04:38 PM ET

DETROIT -(Dow Jones)- Toyota Motor Corp. (TM) will slash capital and research spending for a second year in a move that threatens to erode a significant advantage it holds over ailing U.S.-based rivals.

Toyota said Friday its budget for this financial year will cut capital spending by more than a third, to $8 billion from $13 billion. Research and development funding will be reduced by about 10%, to $8 billion from $9 billion.

The deep reductions planned on spending for everything from vehicle development to factory improvements also are likely to further strain cash- strapped parts suppliers.

Such steps would have been unthinkable a couple of years ago from Toyota. The company in recent years has poured billions into new factories and products in a steady march to taking General Motors Corp.'s (GM) place as the world's largest auto maker based on sales.

The spending cuts, announced as Toyota reported its largest-ever quarterly loss, come along with deep reductions planned in labor and administrative costs.

To minimize the impact of the cuts, Toyota plans to focus spending on developing fuel-efficient compact and hybrid vehicles and advancing fuel-savings technologies.

But the reductions could mean more pain for parts makers already grappling with deep production cuts by General Motors, Chrysler LLC and, to a lesser extent, Ford Motor Co. (F).

They also could have longer-term implications for Toyota.

The auto maker's deep pockets have long given the company an edge over Detroit auto makers, which have raced to slash spending as losses pile up.

Toyota, for instance, had an ample cushion that allowed it to sustain years of substantial losses on the Prius hybrid. Over time, the vehicle has become a top seller and an icon of environmentalism that gave Toyota a green image when it mattered most.

GM has oft lamented that it lacked the recourses to take a Prius-like risk. GM's maker's effort to fight back with the battery-powered Chevrolet Volt came too late to save the company from the bankruptcy threat that now looms.

Notably absent, however, from GM's most-recent list of wrenching cost cuts was a reduction in capital spending. GM Chief Financial Officer said last week the company had decided it can't afford to further whittle down investments in new products.

Toyota, while under far more strain than a year ago, remains in a markedly better position than its Detroit rivals. Even the company's reduced spending dwarfs GM's budget.

GM last year said it would cut capital spending to $4.8 billion in 2009 and in 2010, down from $9 billion.

- By Sharon Terlep, Dow Jones Newswires; 248-204-5532; sharon.terlep@ dowjones.com.

  (END) Dow Jones Newswires
  05-08-09 1638ET
  Copyright (c) 2009 Dow Jones & Company, Inc.

[articsteve]

There are operating losses and net losses, quarterly and annually.   

For the fiscal year just ending March 31, 2009, Toyota's NET ANNUAL LOSS was $4.4 Billion USD.

They are forecasting an additional 5.5 Billion ANNUAL NET LOSS for the next fiscal year ending March 31, 2010, assuming the relationship between the Yen and the USD remain constant.  Plus 1 million decrease in vehicle sales..

These losses are more of an embarrassment than a threat to their survival.  A year ago Toyota had net assets of 120 BILLION USD.  They have deep pockets and still after all this "bad" news have a market cap of 136 Billion.  This news foreshadows just how difficult the situation will be for the companies on the edge.

To put Toyota's net loss of 4.4 Billion for 2009 in perspective, GM had a net loss of 30.9 Billion in the same period.

http://news.aol.ca/article/toyota-reports-worst-ever-annual-loss/619367/

[sailor723]

This news foreshadows just how difficult the situation will be for the companies on the edge.

http://news.aol.ca/article/toyota-reports-worst-ever-annual-loss/619367/

Exactly!

Toyota is entering the tough times with huge cash reserves and a very strong balance sheet. GM,Chrysler (and to a lesser extent Ford) are staggering into the recession bruised and battered from heavy losses,barely on their feet. What if sales stay weak for a year or two longer than forecast? Even restructured,will GM,Chrysler and Ford have the reserves to hang on until the recovery comes and the working capital to compete when it does?.... I wonder

[sirAQUAMAN64]

Just a year ago Toyota was celebrating record profits as it climbed past GM to become the world’s largest car producer, a position it has kept only thanks to even sharper declines in sales and output at its teetering US rival.

Does this mean that VW did not overtake Toyota for the top spot?  I couldn't find any articles past those 'VW could overtake Toyota' ones.

Toyota kept the crown in 2009 Q1.

[Patate]

To put Toyota's net loss of 4.4 Billion for 2009 in perspective, GM had a net loss of 30.9 Billion in the same period.

Ok, and for the 4th quarter of the fiscal years (or the first quarter of the year),  Toyota's 7,7 billions loss was more than GM's (6) and Ford's (1,4) losses.  If the economy stays where it is, there is no way that Toyota will finish 2009 with only 5 billions $ loss.  In 3-4 months, you'll hear them giving out excuses, just like GM did since around 2005.  Those forecasts obviously come from executives that want to keep their job in a company that doesn't tolerate losses of this amplitude.

[rrocket]

  Those forecasts obviously come from executives that want to keep their job

So I guess by your reasoning, the losses posted by Ford and GM must also be lies, right?? 

[Patate]

  Those forecasts obviously come from executives that want to keep their job

So I guess by your reasoning, the losses posted by Ford and GM must also be lies, right?? 

That's not what I meant.  I was refering to their forecasts of 5,5 (if the numbers are correct) billions $ loss for the whole 2009 fiscal year.

You can't really manipulate reports like the 7,7 billions $ report Toyota did.  The only way you can tweak out some of the numbers is by playing with the currency values (Yen vs USD).  Companies that tried manipulating their reports otherwise are like Enron..

I was talking about what Toyota forecasts for 2009.  There's no way they'll only lose 5,5 billions.  A company in expansion mode during a recession is bound to lose lots of cash.  The only way they can damper the losses is by starting to close down plants, but their reputation in the States reside on the fact that that company does not fire fulltime employees ( which is easy when you have a pool of part times).  If they get in panic mode, they lose their corporate reputation, which is something they cannot afford, considering their current awful product portfolio.

[toolatecrew]

To put Toyota's net loss of 4.4 Billion for 2009 in perspective, GM had a net loss of 30.9 Billion in the same period.

Ok, and for the 4th quarter of the fiscal years (or the first quarter of the year),  Toyota's 7,7 billions loss was more than GM's (6) and Ford's (1,4) losses.  If the economy stays where it is, there is no way that Toyota will finish 2009 with only 5 billions $ loss.  In 3-4 months, you'll hear them giving out excuses, just like GM did since around 2005.  Those forecasts obviously come from executives that want to keep their job in a company that doesn't tolerate losses of this amplitude.

Oh Do they now?

Toyota Motor Corp, the world's biggest automaker, forecast a much deeper-than-expected annual loss of $8.6 billion

For the year to next March, the maker of the Prius hybrid car forecast an operating loss of 850 billion yen, more than double the average forecast in a survey of 20 analysts by Thomson Reuters and larger than the 700 billion yen loss predicted earlier on Friday by the Nikkei newspaper.

So Toyota itself ..those executives that want to keep their job in a company that doesn't tolerate losses of this amplitude are forecasting a loss much larger than the presdictions by analytsts or papers? Well that just doesn't make sense does it? I mean if they were going to pad their foracasts to keep their job in a company that doesn't tolerate losses of this amplitude wouldn't one give an OPTOMISTIC forecast (similar to what certain companies did when they presented their plans to the US giovernment) not much LARGER losses?

I'd say the Toyota exectives projecting these losses seem to be very realistic..even pessamistic on their projections.

There is no doubt that this is a negative for Toyota. It has decresed their stock price. It is trading at 76.76 down nearly 3%. No one is going to be happy about that.

Mind you I think there is probaly slightly less panic regarding Toyota trading at 76.76 than GM trading at $1.47 which is down 8%.

Its a matter of perspective. A loss or decline is bad no matter who it is. But when your stock is worth 52 times ypour next nearest competior its porbaly not time to launch into panic when you have even 1 entire year of big losses after your most profitable year ever.

Toyota could survive a $2 drop in share price without even blinking. A $2 drop in share for GM..well that would make it worht less than 0 now wouldn't it.

Toyota is going to have to make major cuts and try to forecats very well so that they can have the right amount of production capcity for next year when the market rebounds somewhat. Eliminating shifts sounds like a good weay to do it. Its easier to add shifts back on that to repopen closed plants.








http://www.financialpost.com/news-sectors/story.html?id=1576543

[safristi]

..seems that a lot of  Toyota's suppliers are laying off........and those folks jobs come with dormitory living accomodation and subsidised meals.................now many are sleeping in parks in Japan....lose job there lose living quarters.....wouldn't look good in Detroit  or Alabama ??......don't they have Unemployment Ins in Japan ........