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Toyota logs $1.60 billion 2009 profit despite recall woes

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Toyota logs $1.60 billion 2009 profit despite recall woes

Tuesday, May 11, 2010

••• Despite massive recalls that dented its safety image, Toyota Motor Corp. said Tuesday it logged a $1.60 billion group operating profit for the business year that ended in March, reversing the $4.99 billion loss recorded a year earlier.

It posted $2.27 billion in group net profit, compared with a loss of $4.73 billion in the 2008 business year, when the global financial crisis hit and car sales in the United States and Europe tanked. Group sales slipped 7.7 percent to $205.56 billion from $221.79 billion.

The steep rebound in profit – the first in two years – comes mostly as a result of cost-cutting efforts.

The safety woes mainly affected sales in the United States and Europe, but incentives in some regions helped shore up sales, limiting the fall in revenue.

“It was a year of being constantly on alert due to the series of recall matters, which caused concerns,” President Akio Toyoda said. “The severe conditions will likely continue, but I believe there is light far away amid the storm.”

Toyota now expects profits to grow in the current business year to next March. It forecasts a $3.03 billion group operating profit and $3.35 billion net profit on $205.56 billion in sales.

The company said it will focus on next-generation environmentally friendly cars by improving technology for hybrids and expanding its lineup. Also, it will gear up sales in fast-growing economies, particularly China and India.

Profit for the last business year mainly came from production cost cuts amounting to $5.63 billion, as well as $5.08 billion worth of reductions in fixed daily costs, including for labor, research and development, the company said.

Toyota said costs linked to its spate of worldwide recalls – $1.84 billion to $1.95 billion for the business year – were within expectations.

But concerns about potential massive recalls over accelerator defects continue.

The earnings results came a day after U.S. Transportation Secretary Ray LaHood hinted at a news conference at Toyota’s headquarters in Aichi Prefecture that more fines could be imposed if needed.

Last month, Toyota agreed to pay a record $16.4 million U.S. government fine for delaying a January recall over defective accelerator pedals.

Meanwhile, the U.S. Department of Transportation’s National Highway Traffic Safety Administration said in a statement issued Monday in Washington that it has opened an investigation into whether Toyota in 2005 notified the agency of a steering relay rod safety defect within five business days of learning of the defect’s existence, as required by law.

“We will fully cooperate with the investigation,” Toyoda said at the news conference.
• Source(s): Toyota Motor Corp.
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