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Toyota Reports $816M Q2 Loss

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[source: Wall Street Journal]


Sees Outlook Improving



TOKYO -- In the latest demonstration of the economic crisis continuing to whack even the mighty, Toyota Motor Corp. Tuesday reported a net loss for the fiscal first quarter ended June due to prolonged slack demand in key markets, and the yen's strength offsetting cost-reduction efforts and recovering sales in China.

However, the world's largest car maker by sales volume now sees narrower losses than initially expected for the fiscal first half ending Sept. 30 as well as for the full year through March 31, as it speeds up cost-cutting measures. Booming sales of its redesigned Prius hybrid is also helping revive its plant operating efficiency after the company reduced production to lower inventory levels in the January-March quarter.

Japan's automobile giant posted a net loss of ¥77.82 billion ($816 million) in the three months ended June, reversing a net profit of ¥353.66 billion in the same period a year earlier.

The result was much better than a mean estimate of a ¥210.4 billion net loss compiled by Thomson Reuters from 16 analyst forecasts. It also marks a significant improvement from the massive net loss of ¥765.8 billion of the previous quarter ended March.

Steered by newly appointed president and founding-family member Akio Toyoda, Toyota now expects a net loss of ¥250 billion for the half ending September and a net loss of ¥450 billion for the full fiscal year through March. The company previously projected a net loss of ¥450 billion for the first half and a net loss of ¥550 billion for the full year.

Still, this will be the second straight year of net loss and worse than the net loss of ¥436.94 billion in the last fiscal year, which was the firm's first annual net loss in 59 years.

Even so, its upbeat projection follows the lifted forecasts reported by Honda Motor Co. and Toyota subsidiary Daihatsu Motor Co., which together suggest the worst effects of the economic downturn on the auto industry may be over.

In tandem with such encouraging developments, auto sales in the U.S. -- Toyota's largest market last year -- climbed at their highest pace in 11 months in July, as customers rushed to showrooms sparked by the government's "Cash for Clunkers' incentive program -- and the future thereof.

Toyota's U.S. sales slipped 11% to 174,872 vehicles, but the drop was slimmer than June's 31.9% decline thanks to clunker deals which the company estimates boosted sales by 30,000 to 32,000 vehicles.

In the first six months of this year, the firm managed to retain the top spot in global auto sales though General Motors Corp. did better than its Japanese rival in the second quarter.

Benefiting from tax breaks and subsidies provided governments in the U.S. and Japan as well as reviving sales in China, Toyota lifted its global sales target for this fiscal year to 6.60 million vehicles from 6.50 million.

Toyota bases its earnings on U.S. accounting standards.


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