Toyota halves profit forecast due to crisis

The Japanese firm said it was reviewing its expansion plans as it became the latest car giant to reveal plunging profits due to the financial crisis, following on the heels of BMW, Nissan and Honda.

Toyota, vying with General Motors for the title of the world’s top automaker, now expects earnings of 550 billion yen (US$5.6 billion) in the current year to March, down from the 1.25 trillion yen previously projected. That would mark a decline of 68 percent from the previous year — the first drop in Toyota’s annual earnings in nine years.

“The severity of the current situation is like nothing we have seen before,” Toyota executive vice president Mitsuo Kinoshita said.

“The global financial crisis has affected the real economy, and the auto markets, particularly in developed countries, are suddenly decelerating.”

Toyota said its first-half earnings tumbled 48 percent to 493.47 billion yen due to a stronger yen and weak global economy. Operating earnings fell 54.2 percent to 582.07 billion yen as revenue dropped 6.3 percent to 12.19 trillion.

“This is an unprecedented situation. It is difficult to predict where this will end,” Kinoshita said.

The global slowdown has badly shaken Japan’s automakers, which in recent years have cashed in on worldwide demand for their smaller and more fuel-efficient cars.

In North America, the epicentre of the global credit crunch, Toyota lost 34.6 billion yen excluding one-off gains from derivatives. Profits in Europe plunged.

But analysts noted that Toyota was still doing better than U.S. rivals such as General Motors, which lost US$15.5 billion in the second quarter of 2008.

“At least there’s no red ink at the moment. But if the situation deteriorates we could be looking at that,” said Ashvin Chotai, managing director of Intelligence Automotive Asia, a consultancy firm in London.

Toyota shares dived 10.35 percent to 3,810 yen on fears of weak earnings, which were posted after the market closed.

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