- Title: JAPAN/FILE: Toyota lifts guidance despite recalls clouding outlook
- Date: 5th February 2010
- Summary: TOYOTA CITY, JAPAN (FILE) (MATERIAL ORIGINALLY 4:3) (REUTERS) SIGN READING "WELCOME TO TOYOTA CITY" VARIOUS OF TOYOTA MOTOR CORPORATION HEADQUARTERS BUILDING CARS GOING IN AND OUT OF ENTRANCE OF TOYOTA MOTOR FACTORY
- Embargoed: 20th February 2010 12:00
- Topics: Transport
- Reuters ID: LVACBBTKWLJG1PMAKMR01EUR0G5J
- Story Text: Toyota Motor said on Thursday (February 4) its biggest ever safety recall would cost it up to $2 billion dollars this quarter, but raised its outlook for the financial year to March after a forecast-beating third-quarter.
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.
"When we announced our results last November, we announced a forecast of 350 billion yen loss, but thanks to the reasons given, that has now been reduced to a loss of only 20 billion," Toyota's managing director Takahiko Ijichi told a news conference in Tokyo.
Toyota's recall of more than 8 million vehicles due to problems with unintended acceleration has punished its share price, dented its reputation and overshadowed what until just two weeks ago had been expected to be an upbeat story of improving earnings.
With consumers becoming cautious about buying Toyota vehicles, the company said that it does expect a drop in sales.
"As for the effect on our sales, we expect sales to decline by around 10,000 units globally especially in North America," Ijichi said.
A Toyota official said the new forecasts for the current year took into account an estimated 100 billion yen in costs for the recalls and a further 70-80 billion yen in lost sales.
Toyota also attempted to calm fears that in pursuit of lower costs, the quality of its vehicles would be affected.
"Cost performance and quality are not mutually conflicting. Something that is high quality has a better cost performance. And so, we have no plans to lower quality in order to increase cost effectiveness," Ijichi said at the news conference.
Toyota raised its forecast for global group sales to 7.18 million vehicles from 7.03 million, it also raised the amount of money it expects to save under emergency profit measures introduced earlier this year to 1.59 trillion yen from 1.25 trillion yen.
Investors are now focused on how long and far the recall damage could 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.
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