Toyota Motor Corp, the world’s second-largest automaker, forecast its first operating loss in 71 years on plummeting demand, prompting Moody’s Investors Service to consider downgrading the company’s top-rated credit.
The carmaker will post a 150 billion yen ($1.7 billion) loss in the year through March, it said in a statement on Monday, scrapping a previous forecast of a 600 billion yen profit.
Last fiscal year, Toyota had an operating profit of 2.27 trillion yen.
“The environment we’re in is extremely tough,” Katsuaki Watanabe, president, Toyota, told reporters in Nagoya. “We’re facing an unprecedented emergency situation. Unfortunately, we can’t see the bottom.”
Moody’s is reviewing the carmaker’s “Aaa” rating on $19 billion of debt, possibly boosting the company’s borrowing costs amid tightening credit markets and the worst US auto sales in 26 years.
Watanabe has cut contract jobs, production and executive pay including board-members’ bonuses this fiscal year in a bid to offset slumping demand and a strong yen.
“Toyota’s cost-cutting can’t match plummeting sales,” said Koichi Ogawa, chief portfolio managerat Tokyo-based Daiwa SB Investments, which manages $28 billion. “Everyone is getting hurt with this situation.”
The automaker lowered its net profit forecast 91% to 50 billion yen. The last time Toyota posted an operating loss was in the year ended March 1938, said spokesman Hideaki Homma.
The company revised its forecast for a second time even after adding in an expected gain of 130 billion yen from cost-cutting measures, Watanabe said. Toyota executives saidproduction expansion plans and other investment will be on hold, including a new plant in the southern US state of Mississippi and new vehicle plans in India, until the global market recovers.
The carmaker’s sales in the US, traditionally its most profitable market, plunged 34% in November. Toyota’s European sales dropped 34% last month, according to the European Automobile Manufacturers Association in Brussels.
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