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Toyota expects FY 2020 operating profit to dive 79.5% on coronavirus

  • May 12, 2020
  • , Kyodo News , 8:10 p.m.
  • English Press

TOKYO By Junko Horiuchi


Toyota Motor Corp. said Tuesday it expects group operating profit in fiscal 2020 to drop 79.5 percent to 500 billion yen ($4.65 billion), the lowest in nine years, as the global auto industry feels the strain from the coronavirus pandemic.


While withholding its net earnings forecast for the current business year ending March 2021, citing uncertainties in the global market caused by the spread of the virus, Toyota said its sales are expected to fall 19.8 percent to 24 trillion yen. It anticipates its global vehicle sales will fall 14.9 percent from the previous year to 8.9 million vehicles.


“The impact of the corona shock is significantly larger than that of the Lehman shock,” Toyota President Akio Toyoda told an online press conference, referring to the financial crisis following the collapse of Lehman Brothers Holdings Inc. in 2008.


The estimated operating profit of Japan’s largest automaker would be the lowest since fiscal 2011 following a massive earthquake and tsunami in the country’s northeast.


But Toyoda highlighted that the automaker is expected to see an operating profit this year, unlike fiscal 2008 when it slipped into the red.


He said realizing the profit would be a “starting point to rebirth as a new Toyota,” while expressing his commitment to protecting jobs, maintaining production levels in Japan and accelerating the pace of research and development in next-generation technologies.


With the scale of the economic fallout from the pandemic uncertain, Honda Motor Co., Japan’s second-largest automaker, said Tuesday it could not release any earnings forecasts for the current business year.


In the business year ended March, Honda’s group net profit dropped 25.3 percent to 455.75 billion yen, while its operating profit fell 12.8 percent to 633.64 billion yen on sales of 14.93 trillion yen, down 6.0 percent.


Japanese automakers first suspended operations at their factories and dealers in China, the world’s biggest auto market where the virus was initially detected late last year, and subsequently halted business in other parts of the world as supply chains were disrupted, residents were asked to stay at home and global demand sagged.


Nissan Motor Co., Mitsubishi Motors Corp. and Mazda Motor Corp. have already cut their earnings outlooks for the just-ended year ahead of their delayed releases.


Nissan, Japan’s No. 3 automaker, has projected a net loss of up to 95 billion yen for the year, its first red ink in 11 years.


For the year, Toyota posted a consolidated net profit of 2.08 trillion yen, up 10.3 percent from the previous year and the first increase in two years, on sales of 29.93 trillion yen, down 1.0 percent. Operating profit declined 1.0 percent to 2.44 trillion yen.


In the January-March quarter, Toyota said it lost sales of 380 billion yen and 160 billion yen in operating profit due to the pandemic.


Toyota’s Chief Financial Officer Kenta Kon told reporters the automaker made the latest projections on the premise that sales would bottom out in April and gradually recover to levels seen a year earlier toward the end of 2020.


“We still cannot determine the timing of a recovery with any degree of certainty,” Kon said.


Toyota said its vehicle sales in the year to March of 10.46 million units fell short of its target of 10.73 million units and was the first decline in four years.


Still, Toyota was the second-largest automaker in the world in 2019 after Volkswagen AG of Germany.


Toyota’s factories in the United States and Europe have gradually resumed production after over a month of suspension, while sales in China also picked up at a faster-than-expected pace in March and April, Kon said.


Toyota’s sales figures include vehicles sold by its subsidiaries, small-car manufacturer Daihatsu Motor Co. and truck maker Hino Motors Ltd.



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