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Friday, June 10, 2011

Toyota forecasts profits slump after earthquake

Japanese car giant Toyota has said it expects profits for this financial year to be sharply lower than last year, due in large part to the massive earthquake in March that disrupted production.

The carmaker forecast net profits of 280bn yen ($3.5bn; £2.1bn) for the year to the end of March, down a third on the 408bn yen it made last year.

It said revenues would fall slightly to 8.2 trillion yen.

Toyota has said it hopes to return to 90% capacity in Japan this month.
Earthquake impact

Profits in the first half of the year would be hit particularly hard, the company said.

Thereafter, business is expected to pick up, although the effects of the earthquake and resulting tsunami would be felt for a long time, the world's largest carmaker said.

"The Japanese economy is expected to pick up gradually. However, the damage done by the Great East Japan Earthquake was widespread and serious, and will continue to affect the Japanese economy," the company said.

It added that emerging markets should continue expanding, particularly China and India, while more developed economies such as the US and those in Europe should "continue recovering at a modest pace".

However, it highlighted rising oil prices and high unemployment, particularly in the US, as key risks to future sales.

Toyota said it expected to sell 724,000 vehicles during the full year, with 292,000 of those sold in the first six months.

The earthquake also hit the carmaker's performance during the last financial year, with profits between January and March down 77% to 25.5bn yen from a year earlier.

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