Toyota has 1st annual net loss since ’50

TOKYO (AP) — Toyota, the world’s largest automaker, sank into the red for the October-December quarter and acknowledged Friday it was heading for its first annual net loss since 1950 because of plunging global sales and the strong yen.

Joining a string of Japanese companies that have slashed forecasts, Toyota Motor Corp. said it expects a net loss of 350 billion yen ($3.85 billion) for the year through March.

That’s a stunning reversal from the record 1.72 trillion yen profit the maker of the Prius hybrid and Lexus luxury line had earned the previous fiscal year. In December, the company thought it would eke out a small annual net profit, but the outlook has darkened since then, especially with the dramatic contraction in the U.S. auto market on which Toyota depends so heavily.

For the fiscal third quarter, Toyota racked up a loss of 164.7 billion yen ($1.81 billion), down sharply from the 458.6 billion yen profit it had the same period the previous year, as the global slump squelched sales.

Quarterly sales plunged 28.4 percent to 4.8 trillion yen.

Toyota said the last time it had the equivalent of a net loss was in 1950, when it reported just parent results under different accounting standards than it uses now.

The damage to Toyota’s bottom line was particularly pronounced because the company had been on such an aggressive growth track in recent years, but the downturn came extremely suddenly, said Yasuaki Iwamoto, analyst with Okasan Securities Co. in Tokyo.

“Toyota is having serious problems responding,” he said. “It boasts a full and global lineup of products. But the world’s auto demand changed in a flash.”

And the company can’t count on global sales picking up in the fiscal year through March 2010, and at best can hope to cut costs to minimize the damage, Iwamoto said.

Toyota, which last year overtook General Motors Corp. to become the world’s best-selling auto company, announced no further job cuts Friday. It is reducing the number of contract workers from 8,800 in June to 3,000 in March.

Just a few hours before the earnings were released, Moody’s Investors Service lowered its top credit rating of “Aaa” on Toyota by one notch to “Aa1,” citing fears about its profitability.

Toyota’s global vehicle sales for the October-December quarter shrank by 443,000 units from the same period a year earlier to 1.84 million, as sales dropped throughout the world, including North America, Europe, Japan and other Asian nations, it said.

“Both revenues and profits declined severely during this period,” Executive Vice President Mitsuo Kinoshita said of the latest quarter.

Conditions were especially tough in the U.S. and Europe, and the rapid rise of the yen against the dollar, euro and other currencies, which reduces the value of overseas earnings, also hurt results, he said.

Toyota lowered its global vehicle sales forecast for the fiscal year by 220,000 from its December projection to 7.32 million vehicles. Now it expects 21 trillion yen in sales for the year, down from a record 26.3 trillion yen earned for the previous year.