Toyota paints dim picture for the year

TOKYO - Battered by a slumping North American auto market and unfavorable currency swings, Toyota Motor Corp. is forecasting a double barrel of bad news this fiscal year: its first year-over-year sales slide in nine years and first profit slip in seven years.

The list of problems is growing for Toyota, including soaring material and energy costs and a stagnant auto market in Japan. A weak dollar, now hovering at about 100 yen compared with nearly 120 yen last year, erodes the income of Japanese exporters like Toyota.

Toyota, the maker of the Prius gas-electric hybrid and the Camry sedan, reported Thursday a 28 percent tanking in net profit for the January-March fourth quarter to $3.05 billion -- the first quarterly decline in profit since April-June 2005.

Sales rose 3.8 percent in the most recent quarter to $63.14 billion.

A 'seriously tough' climate

"There is no mistake that things are seriously tough -- even for Toyota," said Tsuyoshi Mochimaru, auto analyst at Lehman Brothers in Tokyo.

Mochimaru warned that the sales strides Toyota is making in China and other relatively new regions probably won't be enough to make up for the battering it's taking in the key North American market.

Like other major automakers, Toyota has been gradually switching its focus to emerging markets, but it still makes about a third of its sales in North America.

Toyota had been on a roll with the success of its fuel-efficient models, including the Prius and the Corolla subcompact, which have gotten a boost from rising gas prices. But recent credit woes have made financing cars more difficult in North America, dampening sales in recent quarters.

For the fiscal year ended March 31, Toyota racked up a record profit of $16.54 billion -- an increase of 4.5 percent over the previous year. The number was in line with the projection Toyota gave in February.

Worldwide sales in the just-ended fiscal year grew 9.8 percent to $252.8 billion, a record for the company.

But Toyota projects this fiscal year's profit will tumble 27 percent to $12 billion, while annual sales are seen falling 4.9 percent to $240.4 billion.

For the fiscal year ended March 31, Toyota sold 8.91 million vehicles around the world. That was 4.5 percent better than a year earlier.

Toyota said it expects to sell 9.06 million vehicles globally for the fiscal year through March 2009, up 1.6 percent from the year just ended.

Despite their troubles, Japanese automakers appear to be faring better than their American rivals. GM lost $3.3 billion in the first quarter. Ford had a surprise profit of $100 million for the same period but expects to lose money this year as the U.S. auto market deteriorates.