Toyota reports 14.5 pct drop in profit on yen, sales fall

Friday, July 29, 2016, Vol. 40, No. 31

TOKYO (AP) — Toyota Motor Corp. reported Thursday a 14.5 percent drop in profit for the fiscal first quarter as sales fell and a strong yen slashed earnings for the Japanese automaker.

Two powerful quakes in southwestern Kumamoto in April that had disrupted production also hurt results.

Toyota's April-June profit totaled 552.4 billion yen ($5.4 billion), down from 646.3 billion yen the same period a year earlier. The results were better than the 435 billion yen profit that analysts surveyed by FactSet had projected.

Quarterly sales fell nearly 6 percent to 6.59 trillion yen ($64.9 billion).

Toyota also lowered its profit forecast for the fiscal year through March 2017, to 1.45 trillion yen ($14 billion), down from an earlier forecast for a 1.5 trillion yen ($14.8 billion) profit.

Toyota, which makes the Prius hybrid, Corolla subcompact and Lexus luxury line, had a 2.3 trillion yen ($22 billion) profit for the fiscal year through March.

Managing Officer Tetsuya Otake said cost cuts did not fully offset the negative impact of the yen's appreciation, which erased 235 billion yen ($2.3 billion) from Toyota's operating profit.

A strong yen erodes the overseas revenue of Japanese exporters like Toyota when translated into yen. The dollar, which was trading at 101.5 yen Thursday, has plummeted in recent months from about 120 yen a year earlier.

Cost cuts did add 90 billion yen ($887 million) to operating income.

Toyota sold 2.17 million vehicles around the world for the quarter. Vehicle sales were up in Japan, the rest of Asia and Europe, but fell in North America.

The recent drop in oil prices tends to work as a minus for Toyota, whose reputation is based on offering gas-sipping compacts and gas-electric hybrids.

Toyota expects to sell 10.15 million vehicles for the fiscal year through March 2017, up from 10.09 million the year before.

Volkswagen AG, despite being tarnished by an emissions-cheating scandal, could overtake Toyota as the world's biggest automaker in global vehicle sales this year, as the German automaker has been closing in on Toyota.

Toyota overtook U.S. automaker General Motors Co. as the No. 1 automaker in 2008, although it relinquished that status for a year in 2011, when Japan was hit by the triple tsunami, quake and nuclear disasters.