With a deepening financial crisis that has people worldwide avoiding new car purchases, Toyota is set to post a loss for only the second time in the company's history.
Proving that no company is insulated from the current financial crisis Toyota Motor Corp. will reportedly file their first annual loss since the company's first year in business. Loss of sales, and a strong Yen are seen as the key problems with this year's report. The 70-year-old company last posted a loss in 1937-38.
Despite making a 140 billion Yen ($1.57 billion) profit in the first half of the year, currency fluctuations took a toll on the company. As the value of the Yen rose, the value of each overseas sale went down. This was especially problematic as the US Dollar has been on a downward slide most of the year. Currency losses for the first six months were in the 300 billion Yen ($3.38 billion) range.
Local newspapers in Japan are reporting that Toyota will post an operating loss for the fiscal year despite the first-half profit.
One analyst told Automotive News the loss should not be Earth-shattering. "Toyota has been expected to post (consolidated) losses for the second half, but it would be a surprise if the loss became so big that it would more than wipe out the first-half profits," said Koji Endo, an auto analyst for Credit Suisse.
Endo continued to say that the Japanese automaker will be under increased pressure from shareholders to cut costs across the board, including steel and material procurement.
A spokeswoman for Toyota would not comment on media inquiries. Fiscal year-end is March 30, 2009. Toyota's year-end report will likely come in May.