Japan's biggest earthquake on record hit Toyota Motor's quarterly profits harder than expected, prompting renewed calls for the government to do more to support Toyota's pledge to keep building large numbers of cars in Japan. The 9.0 magnitude earthquake that rocked north-eastern Japan on March 11 forced Toyota and other Japanese automakers to slash output at home and abroad as they struggled to secure vital parts. The ensuing nuclear disaster and power shortages have compounded problems.
The world's biggest automaker on Wednesday gave no earnings forecasts for the current business year due to the continued disruption to production, but said output would begin recovering as much as two months earlier than it had expected as parts makers come back on line. Toyota expects to give a guidance by mid-June, it said.
The disasters have added another reason not to produce cars in Japan, already unprofitable for exports with the dollar at 80 yen. Toyota, which has said it needs the dollar at 85 yen or weaker to break even in Japan, did not forecast the yen rate for this year.
Toyota has long been accused by some of putting the interest of Japan before its shareholders. Investors said the pressure to explain its rationale of making at least 3 million vehicles a year in the shrinking Japanese market could grow given the current crisis.
Among Japan's top car makers, Toyota is most exposed, making 38 percent of its cars at home compared to 25 percent for Honda Motor and Nissan Motor. Toyota President Akio Toyoda acknowledged that the headwinds were greater now, given the concerns over power supply and the risk of aftershocks' disrupting the supply chain again, but repeated he remained committed to Japan and protecting its jobs.
"The auto industry has a very broad reach, and we have the ability to drive Japan's recovery during these very tough times," Toyoda, the grandson of the company's founder, told a news conference. "Toyota was born in Japan, raised in Japan and is now a global company," he said. "I love Japan, and I want to keep the tradition of manufacturing strong here."
Chief Financial Officer Satoshi Ozawa, seated beside him, stressed that for that to happen, Toyota needed help from the government to level the playing field against global competitors such as through free trade agreements and currency policy. "As long as the president is saying, 'Let's keep fighting and get through this' we will do that," Ozawa told reporters after the news conference. "But as the one responsible for the coffers, I have to say that the current environment makes it very, very difficult."
The maker of the Corolla and Crown sedans said January-March operating profit fell 52 percent to 46.1 billion yen ($570 million), compared with an average estimate of 94.6 billion yen from 17 analysts who revised their numbers after the quake, according to Thomson Reuters I/B/E/S. That was the weakest operating profit in seven quarters.
The earthquake shaved 110 billion yen from the operating profit for the full year as it lost 170,000 units in potential sales, Toyota said. Fourth-quarter net profit, which includes earnings made in China, fell 77 percent to 25.4 billion yen. For the business year to March 2012, analysts forecast an average operating profit of 307.5 billion yen ($3.83 billion), down 34 percent from 468 billion yen last year. Uncertainties over the broken supply chain had yielded a wide range, from a loss of 25 billion yen to a profit of 846 billion yen.