Toyota Motor Corp. (TM) reported Thursday an 84.4% fall in profit for the second quarter, reflecting sharp decline in vehicle sales in all regions, as well as the negative impact of the yen's appreciation. Further, the Japanese automaker cut down its fiscal 2010 net loss and operating loss forecast, and lifted revenue view on anticipated higher vehicle sales and demand-stimulating measures by governments worldwide. However, the company added that the outlook for global vehicle demand still remains uncertain.
On U.S. GAAP basis, consolidated net income attributable to the company for the second quarter fell to 21.8 billion yen from last year's 139.8 billion yen.
Equity in earnings of affiliated companies was a loss of 59.1 billion yen, compared to profit of 49.1 billion yen a year ago. Income before income taxes and equity in earnings of affiliated companies fell 58.8% to 75.5 billion yen from prior year's 183.4 billion yen. Operating income declined 65.8% to 58.0 billion yen from last year's 169.5 billion yen, and operating margin dropped to 1.3% from 2.8% a year earlier.
Net revenues for the quarter were 4.54 trillion yen, down 24% from 5.98 trillion yen in the same period a year ago.
On a Japan GAAP basis, unconsolidated net loss was 24.7 billion yen for the quarter, compared to prior year's net income of 151.1 billion yen. Operating loss was 83.9 billion yen, while last year's operating income was 79 billion yen. The company reported net revenues of 2.03 trillion yen, down 26.5% from 2.76 trillion yen a year ago.
On a U.S. GAAP basis, consolidated net revenues from Japan fell to 2.18 trillion yen from 3.55 trillion yen last year, and North American net revenues declined to 1.42 trillion yen from prior year's 1.86 trillion yen. Europe generated net revenues of 564.3 billion yen, lower than 867.7 billion yen a year ago.
Business segment-wise, net revenues from Automotive were 4.11 trillion yen, lower than last year's 5.44 trillion yen, and Financial Services' net revenues fell to 312.0 billion yen from 374.6 billion yen a year earlier.
In the quarter, vehicle production totaled 1.64 million units, down from 1.95 million units last year. Production in Japan, including Daihatsu & Hino, was 947 thousand units, compared to 1.20 million units in the previous year. Overseas production, including Daihatsu & Hino, fell to 688 thousand units from 754 thousand units in 2009.
Vehicle sales in the quarter fell 16.2% to 1.73 million units from last year's 2.06 million units, with sales in Japan declining to 496 thousand units from 504 thousand units a year ago, and overseas sales declining to 1.23 million units from 1.56 million units last year. Sales in North America totaled 518 thousand units, down from prior year's 629 thousand units.
In the preceding first quarter, Toyota slipped to a loss from prior year's profit, hurt by sharp revenue declines across all business segments and geographies that reflected lower vehicle sales and the yen appreciation. First-quarter net loss attributable to the company was 77.82 billion yen, compared with a profit of 353.66 billion yen last year. Loss per share was 24.82 yen versus a profit per share of 112.28 yen in the previous year. On a consolidated basis, the company's net revenues reached 3.84 trillion yen, a decrease of 38.3% from 6.22 trillion yen in the same period last fiscal year.
Toyota's rival Honda Motor Co. Ltd. (HMC) last week reported a sharp decline in second-quarter profit, as sales declined across all segments and geographies, along with the impact of adverse currency movements. The maker of Honda Civic said net income for the quarter declined to 55.331 billion yen from 129.292 billion yen in the previous year. Net income attributable to the company plunged 56.2% to 54.037 billion yen from 123.316 billion yen reported last year. On a basic per share basis, the decline was to 29.78 yen from 67.96 yen in the prior year. In U.S. dollar terms, net income attributable to the company for the latest period was $599 million, or $0.33 per share. Net sales and other operating revenue declined 27.2% to 2.056 trillion yen, or $22.799 billion, from 2.827 trillion yen generated last year.
For the first six months of fiscal 2010, Toyota recorded a consolidated net loss of 64.98 billion yen, compared to last year's profit of 521.77 billion yen. Net loss attributable to the company was 55.99 billion yen or 17.85 yen per share, compared to a profit of 493.47 billion yen or 156.90 yen per share in the previous year.
The company attributed the first-half net loss mainly to the effects of sales volume and mix and the appreciation of the Japanese yen against the U.S. dollar and the euro that overrode the positive impact of the company's reduction in fixed costs and cost reduction efforts.
On a consolidated basis, net revenues plunged 31.3% to 8.378 trillion yen from 12.19 trillion yen in the same period last fiscal year. Automotive net revenues fell 32.6%, and financial services net revenues declined 14.3%. In the first half, Japanese net revenues fell 32.9%, North American net revenues declined 34.4%, European net revenues went down 39.5%, Asia net revenues dropped 33.3% and net revenues from other region fell 40%.
Consolidated vehicle sales were 3.13 million units in the first-half, a decrease of 26.4% from 4.25 million units last year.
First-half operating loss was 136.9 billion yen, compared to operating income of 582.0 billion yen in the previous year.
Commenting on the results, Toyota Executive Vice President Yoichiro Ichimaru said, "The net revenues and profits declined for this period due to the decline in vehicles sales in each region, as well as the negative impact of the yen's appreciation. However, we continued to make improvements in our reduction in fixed costs and cost reduction efforts in the first half of fiscal year 2010. Progress with our Emergency Profit Improvement activities have been steadily bearing fruit. In addition, demand-stimulating measures by governments worldwide have contributed to our revised targets for the full fiscal year."
Further, Toyota announced an interim cash dividend of 20 yen per share for the first half of the fiscal year, in comparison to prior year's interim dividend of 65 yen per share. The company noted that the dividend reflects the serious financial situation which resulted in a net loss for the period.
Looking ahead, Toyota revised its fiscal 2010 outlook. The company now expects consolidated net loss attributable to the company of 200 billion yen or 63.78 yen per basic share, compared to previous loss forecast of 450 billion yen.
Full-year consolidated net revenues is estimated to be up to 18.0 trillion yen, while previous forecast was 16.80 trillion yen, and operating loss is currently projected to be 350 billion yen, compared to previous loss projection of 750 billion yen. The revised revenue forecast reflects a 12.3% decline from last year's revenues.
In the year 2009, the company had reported net loss of 437 billion yen, operating loss of 461 billion yen, and net revenues of 20.53 trillion yen.
Further, Toyota currently projects consolidated vehicle sales of 7.03 million units, compared with prior guidance of 6.6 million units, an increase of 430 thousand units. In the year 2009, the company's consolidated vehicle sales were 7.57 million units. The growth in vehicle sales forecast is expected to results from Japan, North America, Asia and other regions, except Europe.
The company also revised its target for Emergency Profit Improvement activities to 1.250 trillion yen from previously projected 900 billion yen, reflecting the improved outlook for vehicle sales and the progress of variable and fixed cost improvements in excess of its previous plan.
Commenting on the amended forecasts, Ichimaru said, "We will continue to promote profit improvement activities across the company. However, the outlook for global vehicle demand still remains uncertain. We will therefore continue to carefully analyze the global market going forward in order to further improve our earnings prospects."
Under Japan GAAP basis, the company's unconsolidated net loss for fiscal 2010 is still projected to be 120 billion yen, while lifted its net revenue forecast to 8.20 trillion yen from previous outlook of 8.00 trillion yen.
Peer Honda Motor also lifted its earnings and revenue forecasts for fiscal 2010, as it estimates to sell more units of motorcycles and automobiles than projected earlier.
TM closed Wednesday's regular trading session at $79.46, up $0.39 or 0.49%, on a volume of 802,445 thousand shares. In the past 52 weeks, shares have been trading in a broad range of $55.41 to $87.67.
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