Page last updated at 11:03 GMT, Thursday, 6 November 2008

Toyota slashes profits forecast

Toyota Prius
Until recently, Toyota had seen solid earnings growth

Japanese car firm Toyota has shocked analysts by announcing much lower than expected quarterly profits and slashing its earnings forecast for 2008.

The maker of the Camry Sedan and Prius saw net profit fall 69% to 139.8bn yen in the three months to September.

The firm also cut its net annual profit forecast to 559bn yen ($5.69bn; 3.5bn) for the year to 31 March 2009, from an earlier estimate of 1.25 trillion yen.

Toyota has been hard hit by the US slowdown as consumers cut spending.

The global economic slowdown and the stronger yen, which hurts Toyota's exports, are expected to put an end to eight straight years of profit growth at the carmaker.

'Shocking figure'

The firm said it expected annual operating profit to fall to 600bn yen down from its previous forecast of 1.6 trillion yen.

Tsutomu Yamada, analyst at Kabu said the figure was "far below expectations and a shocking figure".

"I had never imagined such a big downward revision on its earnings outlook," said Yasuaki Iwamoto, an analyst at Okasan Securities.

"It was a negative surprise and a large impact on its stock price tomorrow would be inevitable".

Shares in the firm have fallen 37% since the start of the year and were down 10% on Thursday ahead of its earnings announcement.

Fuel-efficient cars

Toyota had been faring better than many US firms, having benefitted from customers moving to more fuel-efficient models.

Its rivals, such as General Motors and Ford Motor, have been seeing sharp declines in car sales in the US for some time.

But the downturn has prompted an industry-wide contraction, with many firms predicting tough times in the months ahead.

In the first six months of Toyota's financial year, sales grew in Asia, South America and Africa, but these gains were overshadowed by sales declines in Japan, North America and Europe.

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