Carmaker Toyota eyes smaller loss

Japanese carmakers have been showing signs of recovery

Toyota, the world's biggest carmaker, has cut its operating loss forecast for the financial year to 350bn yen ($3.9bn; £2.36bn) from 750bn yen.

It comes as the maker of the Prius hybrid revealed quarterly net profits of 21.8bn yen for the three months to October, against 139.8bn yen in 2008.

In August, it revealed plans to close a production line in Japan for a year.

And on Wednesday it announced it was pulling out of Formula 1, citing "the current severe economic realities".

Cost cutting

In May, Toyota had reported its worst annual loss, of 436.94bn yen, in the year to 31 March.

The global economic downturn and strong yen, which make it expensive for exporters such as Toyota, have hit the Japanese carmaking sector in the past year.

However, Toyota's latest figures - showing a return to profit - are the latest in a series of recoveries seen at Japanese carmakers, including Honda and Nissan, which have also reported healthier earnings.

"Next year will basically see a focus on cost cutting," said Koichi Ogawa, at Daiwa SB Investments in Tokyo.

"They really have to go back into the black next year."

The previously announced closure of production at a plant in Aichi prefecture in Japan - from the first quarter of 2010 to mid-2011 - will reduce output by 220,000 vehicles.