Toyota ekes out quarterly profit, raises forecast

TOKYO — Toyota eked out a 1.1 billion yen ($14 million) quarterly profit and raised its annual earnings forecast Tuesday as it mounts a comeback from the devastation of the earthquake and tsunami in northeastern Japan.

Still, April-June profit for Toyota Motor Corp. was a fraction of the 190.4 billion yen it earned a year earlier.

Quarterly sales crashed 29 percent to 3.44 trillion yen ($44.68 billion) because Toyota made far fewer cars after the March 11 disasters destroyed parts suppliers in the country's industrial northeast.

Toyota cited how auto sales had held up in Asian nations such as Indonesia in raising earnings and sales forecast for the fiscal year through March 2012.

Toyota now expects to sell 7.6 million vehicles worldwide, up from an earlier forecast of 7.24 million vehicles, and better than the 7.3 million it sold the previous fiscal year.

But that's unlikely to be enough to avert losing its crown as the world's biggest automaker by vehicle sales to General Motors Co.

Christopher Richter, analyst at CLSA Asia-Pacific Markets in Tokyo, thinks it would be a remarkable achievement in the face of the disasters if Toyota manages to keep its No. 1 spot.

Toyota staying in the black rather than posting a significant loss was surprising good news, given how bleak things looked even a month ago, he said.

"They bounced back and managed to do better than street expectations," Richter said. "In balance, this is a positive announcement."

The automaker now expects an annual profit of 390 billion yen ($5.1 billion) compared with its previous forecast of 280 billion yen ($3.6 billion) profit. The new forecast is still 4 percent lower than profit in the previous year.

Toyota raised its annual sales forecast to 19 trillion yen ($247 billion) from 18.6 trillion yen ($242 billion). That would mark a slight improvement from the previous year's 18.99 trillion yen.

All of the Japanese automakers were hit by a shortage of key parts after the earthquake and tsunami.

Toyota's sales were affected not only in Japan but also in the U.S. and other important markets as reduced car production fell short of demand.

But the maker of the Prius hybrid, Camry sedan and Lexus luxury models appears to be bouncing back, as are rival Japanese automakers.

The quarterly result was better than expected. A FactSet survey of analysts had forecast Toyota to report a quarterly loss.

Toyota, based in a central Japan city named after the automaker, said it was able to recoup some lost sales from relatively new markets like Indonesia and other Asian nations.

"Despite the impact of the earthquake, we were able to maintain a similar level of vehicle sales as the previous year," Toyota Senior Managing Officer Takahiko Ijichi said.

Ijichi acknowledged that the surging yen remains a problem because Toyota can no longer raise vehicle prices in the face of rising competition from South Korea's Hyundai Motor Co.

"The strong yen at this level is really tough for us as an exporting business," he told reporters at the automaker's Tokyo office.

Ijichi lamented Toyota was losing sales revenue of about 300,000 yen ($3,800) per vehicle in the U.S. because of currency fluctuations over the past year.

Toyota said the unfavorable exchange rate erased 50 billion yen ($649 million) from April-June profit.

Ijichi said Toyota would work on cost cuts and sales increases that won't be affected by the unfavorable exchange rate.

The dollar has slid to about 77 yen in the past few days. Automakers are counting on it trading at about 80 yen this year.

Toyota recorded lower vehicle sales in all key regions around the world in the latest quarter, including Japan and North America.

But it is optimistic about a comeback in the second half of the fiscal year. Toyota has said that car production is almost back to normal after initially warning that restoring full capacity would take until late in 2011.

Ijichi said Toyota will offer a new models in coming months in the U.S. and likely resort to fleet sales and aggressive incentives to regain market share so it can be back at pre-disaster levels by early next year.

Toyota sold 1.22 million vehicles worldwide in April-June, down about a third from 1.82 million vehicles during the same period in 2010.

Separately, Toyota announced Tuesday its production and sales plan for the January-December 2011 calendar year.

Toyota plans to make 8.04 million vehicles around the world in 2011 and sell 7.9 million vehicles — showing that the automaker is back on a growth track after being hit by the global financial crisis and massive recalls.

Before those woes, Toyota had been targeting global sales of 10 million vehicles for 2009.

Two days before Japan was struck by the magnitude-9.0 earthquake, President Akio Toyoda, the grandson of the automaker's founder, outlined a global strategy aimed at achieving an industry first of annual sales of 10 million vehicles by 2015.

Other Japanese automakers also surprised by holding up relatively well, partly due to good sales in high growth markets such as China, where they remain strong players.

Nissan Motor Co., Japan's No. 2 automaker, last week reported a smaller-than-expected 20 percent drop in quarterly profit to 85 billion yen ($1 billion), and stuck to its forecast for 270 billion yen ($3.5 billion) in annual profit.

Honda Motor Co. reported Monday a nearly 90 percent plunge in quarterly profit to 31.7 billion yen ($412 million), but raised its full year forecast to a 230 billion yen ($2.9 billion) profit.

Honda expects to sell 3.435 million vehicles worldwide, some 135,000 more than it forecast in June. It sold 3.512 million vehicles the previous fiscal year.

Toyota stock slipped 0.3 percent to 3,160 yen. Earnings were announced after trading ended in Tokyo.