WRAPUP 2-Toyota's $2 bln recall hit to keep it in the red

giovedì 4 febbraio 2010 10:21

   For more on Toyota's safety recall, click [ID:nN27231388]  
 * Toyota sees FY op loss Y20 bln vs Y38 bln consensus loss
 * Q3 op profit Y189 bln yen vs Y99 bln consensus
 * Sees $2 bln hit in costs, lost sales to March from recall
 * US Dept of Transport "will hold Toyota's feet to the
 * Toyota shares sink, hit 10-mth low in Tokyo
 (Adds Prius detail, share volumes)
 By Chang-Ran Kim and John Crawley
 TOKYO/WASHINGTON, Feb 4 (Reuters) - Toyota Motor Corp
(7203.T: Quotazione) expects costs and lost sales from its massive safety
recall to total $2 billion by the end of March, keeping it in
the red for the year despite its strongest profit in six
 Toyota's recall of more than 8 million vehicles due to
problems with unintended acceleration has wiped out $30 billion
in share value, hurt its reputation and overshadowed what until
just two weeks ago had been expected to be an upbeat story of
improving earnings.
 "Toyota's recall this time is unlike any other in auto
industry history," said Lee Sung-Jae, an analyst at Kiwoom
Securities in Seoul. "The scale is huge to begin with, and this
deals a fatal blow to the very core value Toyota represented --
that is the quality of its cars."
 Automakers enjoyed a boost in demand in the latter part of
2009, thanks largely to government incentives designed to spur
sales and improving access to credit as the global economy
 Toyota was one of the biggest beneficiaries of the U.S.
cash-for-clunkers scheme, allowing it to post its best
quarterly operating profit since early 2008 in the three months
to December.
 But the world's largest automaker is now under
investigation for its handling of the recall of a host of its
most popular models including the Camry, Corolla and Rav4.
 Up to 19 U.S. crash deaths over the past decade may be
linked to accelerator-related problems at Toyota, congressional
officials have said.
 U.S. Transportation Secretary Ray LaHood said on Wednesday
he would take the unusual step of calling Toyota President Akio
Toyoda to emphasise how seriously the Obama administration is
taking the investigations. [ID:nN03169882]
 "Our ... people will hold Toyota's feet to the fire to make
sure they are going to do everything they said they were going
to do to make the vehicles safe," he said.
 For a graphic on Toyota earnings, click
 For a video on Toyota's hometown, click;
 With less than two months left in the current financial
year, Toyota slashed what most analysts had considered an
excessively conservative operating loss forecast to 20 billion
yen ($220 million) from 350 billion yen.
 A Toyota official said the new forecasts for the current
year took into account up to $2 billion lost from the recall --
an estimated 100 billion yen in costs and a further 70-80
billion yen in lost sales, in line with analysts estimates.
 Senior Managing Director Takahiko Ijichi said the company
was unsure about the impact beyond the end of this financial
year, but investors expressed their concerns.
 "The company's forecast earnings and profitability will
surely decrease because of the recall," said Benedicte Mougeot,
fund manager of HSBC's GIF Japanese equity fund in Hong Kong.
"Taking into account the increased risk and reduced
profitability, we will review our investment."
 Shares in Toyota have lost as much as 23 percent in the
last two weeks since and slid 3.5 percent to a 10-month closing
low of 3,280 yen on Thursday. More than 56 million shares were
traded, the most in at least a quarter of a century.
 Toyota's new forecast for the year to March compares with a
38 billion yen annual loss forecast in a survey of 19
brokerages by Thomson Reuters I/B/E/S.
 Toyota posted October-December operating profit of 189
billion yen, easily beating a 99 billion yen estimated by
Thomson Reuters I/B/E/S. Its nine-month operating profit of 52
billion yen implies a 72 billion yen loss in Q4.
 Investors have now turned their focus on how long and far
the damage would go, with Toyota's sales in its most important
U.S. market already falling 16 percent in January -- enough to
knock it to third place, below Ford Motor Co (F.N: Quotazione).
 Two congressional committees plan hearings this month on
the Toyota recalls.
 "I am in no way certain that Toyota's explanation for the
cause of incidents of sudden acceleration in its vehicles
satisfies me," John Dingell, a Michigan Democrat and longtime
ally of the U.S. auto industry, said on Wednesday.
 The developments underscored the increasingly political
overtones of a safety crisis that has hit Toyota sales, and
rocked confidence in a brand built on its reputation for
 In a further blow, Toyota is looking into dozens of
complaints about inadequate braking on its new Prius hybrid on
bumpy or frozen roads.
 Toyota said on Thursday it had identified and fixed a
software problem related to its anti-lock braking system. A
Toyota quality official said depressing the brakes further
would activate normal braking on the car, meaning the glitch
was not legally considered a safety hazard.
 "This issue shows that we may have fallen short of the
standards expected of us by our customers," Hiroyuki Yokoyama
said, declining to say whether an official recall was planned.
 (Additional reporting by Bernie Woodall and Kevin Krolicki in
DETROIT; Parvathy Ullatil in HONG KONG; and Jungyoun Park and
Shin Ji-eun in SEOUL; Writing by Lincoln Feast; Editing by Jean