Toyota's profits beat forecasts

The Japanese carmaker Toyota has seen quarterly profits drop less than forecast but remains cautious.

Net profits fell 28% in the three months to June at 353.7bn yen ($3.2bn; £1.6bn), from a record 491.5bn yen in the same period of last year.

The firm said the trading environment had taken a sharp turn for the worse, creating a "very tough" quarter.

The weak US economy and the stronger yen, which makes Japanese goods more expensive overseas, have dented sales.

Another factor making it harder for Toyota and other car firms is the rising price of raw materials.

While US sales have slowed, Toyota has seen sales in countries such as Russia and China rise.

Energy efficient

Given the tough conditions, Toyota said: "It will be crucial for us to act quickly and flexibly to overcome this."

The firm is maintaining its earnings outlook for the year to March 2009, predicting net profits of 1.25 trillion yen.

As energy prices rise, customers are moving away from gas-guzzlers, helping boost sales of more energy-efficient models including Toyota's Prius hybrid.

While its rival Honda Motor recently reported an unexpected rise in quarterly profits, it is predicting falling profits for the whole of the year.

US carmakers seem to be struggling more than their Japanese rivals. General Motors recently reported a $15.5bn quarterly loss and Ford's three-month loss was $8.7bn.

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