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Toyota predicts first loss in 71 years

December 23rd, 2008
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Japan’s biggest carmaker Toyota has forecast its first annual loss in 71 years due to plummeting sales and a surge in the value of the yen.

The firm said it expected a loss of 150 billion yen (£1.1bn) in yearly operating profits - from its core operations. The carmaker recorded an operating profit of 2.27 trillion yen last year.

Toyota said it still expected to make a profit on a net level for the year ended March but has cut its forecast sharply to 50bn yen, down from a previous estimate of 550bn yen.

It is the second profit warning by Toyota in less than seven weeks. The latest estimate is far lower than its net profit of 1.7 trillion yen earned the previous year.

Toyota’s president Katsuaki Watanabe said that the company now expected to sell 8.96 million vehicles around the world this year, down 4% from the previous year. Unlike previous years, he gave no goal for 2009.

In a statement the manufacturer said it was cutting its profits forecast because of the soaring yen ‘as well as a review of sales plans following a faster than expected contraction of the auto market’.

Japanese carmakers have all been hurt by plummeting car sales in their key overseas markets. The surging yen has eroded their overseas earnings and also hit their profits - the dollar has fallen to 13-year lows against the Japanese currency.

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