Toyota Forecasts Profit in Face of Recall Crisis

By Makiko Kitamura and Tetsuya Komatsu | www.bloomberg.com

Feb. 4 (Bloomberg) -- Toyota Motor Corp., the world’s largest carmaker, forecast a return to profit this fiscal year as it predicts a 51 percent surge in North American sales this quarter even as the company faces its worst-ever recall crisis.

The company expects net income of 80 billion yen ($880 million) in the year ending March 31, compared with an earlier forecast for a 200 billion yen loss, it said in a statement in Tokyo today.

Toyota’s President Akio Toyoda, 53, predicted sales of 503,000 vehicles in North America this quarter even as the company has been forced to take its best-selling models off the market in the U.S. The global recall of almost 8 million vehicles due to cases of unintended acceleration will dent demand by 100,000 vehicles and cost 100 billion yen, the company said today.

“There’s a huge possibility that Toyota won’t meet this forecast,” said Koji Endo, managing director of Advanced Research Japan. “The recalls will damage their reputation and if they widen, there will be costs which Toyota has not yet taken into account.”

Toyota said today it may recall the latest version of its Prius hybrid car in Japan, after the government instructed the company to investigate complaints about braking problems.

Toyota has accounted for the recall costs in its forecast, senior managing director Takahiko Ijichi told reporters in Tokyo today. The forecast does not include a possible Prius recall.

The company’s shares fell 3.5 percent to 3,280 yen in Tokyo today, the lowest level in more than 10 months.

Net Income

The carmaker posted net income of 153.2 billion yen in the quarter ended Dec. 31 compared with a loss of 164.7 billion yen a year earlier. Vehicle sales in the quarter gained 12.4 percent to 2.065 million, led by gains in North America and Japan. Revenue in the quarter rose 10 percent to 5.29 trillion yen.

The carmaker changed the brake design for the Prius in January, it said today. The Toyota City, Japan-based carmaker is also examining other hybrid models.

The company raised its forecast for global vehicle sales to 7.18 million compared with an earlier prediction of 7.03 million. The carmaker sold 334,000 vehicles in North America in the fourth quarter of last fiscal year.

Prius

A recall of the Prius, driven by U.S. actor Leonardo DiCaprio and Apple Inc. co-founder Steve Wozniak, would bring the crisis to Toyota’s home market and tarnish the reputation of what President Toyoda has called the company’s flagship model.

Outside of Japan, the company is recalling at least 7.8 million vehicles. The carmaker is fixing accelerator pedals on models including the top-selling Camry and Corolla models.

That recall covers 2.57 million vehicles in the U.S. and Canada. It also includes 1.71 million in Europe, 80,000 in China, and 180,000 in Latin America, Africa and the Middle East, Toyota’s Sasaki told reporters earlier this week.

Separately, Toyota is recalling 5.35 million vehicles in the U.S., because of floor mats that could jam pedals. The models involved include 2004-2009 Prius hybrids, 2007-2010 Lexus ES350s, 2006-2010 Lexus IS250s and 2006-2010 Lexus IS350s. Toyota has said 2.1 million cars were recalled for both mat and accelerator-related problems.

To contact the reporter on this story: Makiko Kitamura in Tokyo at mkitamura1@bloomberg.net