ToMoCo: Steeper Losses Ahead

Formerly proud Toyota is staring in the eyes of another multi-billion dollar loss for the new 2009 fiscal year, the Nikkei [sub] reports. The fiscal year lasts through March 2010. According to estimates, the world’s largest automaker will report a loss of around $5 billion for the 2008 fiscal that just ended on March 31. For the new year, the loss may be steeper.

A survey of 19 brokerages by Reuters Estimates agrees. It sees the operating loss at the world’s largest automaker expanding to a median $5.5 billion in the current year, from an estimated $4.5 billion in the year ended last month.

Analysts say (duh) the outcome will “depend on the exchange rate, the global vehicle demand and how much Toyota will be able to reduce its costs.” (Who wants my résumé?)

Toyota group companies are forecast to sell about 6.5 million vehicles this fiscal year, falling below 7 million units for the first time in six years. ToMoCo sees demand in the US likely to remain stagnant in the current year. Sales in Japan and Europe are projected to fall below previous-year levels.

The weakening of the yen just in time for the end of the Japanese 2008 fiscal year spared the Japanese auto industry an even bigger disaster. A dollar could be had for as little as 86 yen in the December-January period, giving Nipponese bean counters ulcers. On critical March 31, the greenback stood at 99 yen—no doubt with a little help from its friends at Tokyo’s Central Bank. Now it’s holding steady at its normal level of 100 yen to the Yankee dollar.

According to the Nikkei [sub], the weakening of the yen since the beginning of the year is believed to have pushed up the combined operating earnings of the seven Japanese automakers by about $1.2 billion for the January-March quarter. Every little billion helps.

Toyota is the most affected by foreign exchange fluctuations among all of Japan’s listed firms. Each 1 yen change in the value of the Japanese currency against the dollar impacts its annual profit by 40 billion yen.

You will see many Toyota execs go down to the local Shinto shrine, throw some coins in the bucket, ring the bell and mumble a silent prayer for 110 yen to the dollar. Amaterasu, kudasai, it would be most welcome, domo arigatou gozaimasu.