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Toyota Profits Plunge as New Challenges Threaten Future Earnings

Maker withdraws future guidance as parts shortages worsen in wake of Thai flooding.

by on Nov.08, 2011

Toyota CEO Akio Toyoda at the launch of the Lexus GS in Pebble Beach last August.

Toyota reported a sharp 18.5% downturn in its latest quarterly earnings, largely the result of parts and product shortages caused by the earthquake and tsunami that struck northeastern Japan last March.  But the maker warned it is facing new challenges ahead.  On an operating basis, the maker said it lost $418 million for the first half of its fiscal year, compared with a $4.1 billion profit a year ago.

In a presentation from Tokyo, Toyota officials withdrew their earlier guidance for the rest of the fiscal year – which ends on March 31, 2012 – due to the potential havoc the company faces in the wake of the flooding that struck Thailand last month.  That has disrupted supplies of both vehicles and parts, resulting in new production cuts at Toyota plants around the world.

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Further complicating matters, the yen continues to gain strength against the dollar and other major currencies. The current exchange rates are “far beyond what is tolerable,” Toyota CEO Akio Toyoda said earlier in the week, warning that if the trend isn’t reversed Japan’s manufacturing base could be “destroyed.”

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Toyota Cutting Production – Again – Due to Thai Flooding

Another setback for maker’s ambitious turnaround plan.

by on Nov.03, 2011

The production cuts will likely make it more difficult to find the new 2012 Toyota Camry.

Toyota’s ambitious turnaround plan is in for another setback, the maker issuing a terse news release indicating it will be forced to trim U.S. production due to parts shortages caused by flooding in Thailand.

The announcement comes just days after Honda revealed it will also have to slash production on its North American assembly lines due to flooding that has put much of Thailand underwater – drowning not only the big Honda assembly plant near Bangkok but a number of that country’s key automotive suppliers.

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“Flooding in Thailand continues to necessitate adjustments in Toyota’s production hours,” Toyoda said in its statement.  “To conserve the affected parts, all North American vehicle assembly plants will suspend overtime the week of November 7.”

While the production cuts at Toyota appear to be modest they couldn’t come at a worse time for the maker which lost more than 700,000 units of production worldwide since spring due to the earthquake and tsunami that devastated Northeast Japan.

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Toyota Extends Production Cuts at U.S. Plants

Will continue operating at reduced speed at least through June.

by on Apr.20, 2011

Toyota extends production cuts outside Japan.

Still struggling with a shortage of Japanese-made parts, Toyota says it will extend production cuts at its North American “transplant” factories until at least June – but says the move will not result in any layoffs.

Like its Japanese competitors, Toyota has been struggling to get its operations back up to speed in the wake of the March 11th earthquake and tsunami – and subsequent nuclear crisis – that devastated Japan. The maker’s home assembly plants were down for a month, resulting in the loss of over a quarter million vehicles of production.

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But the cuts have been extended to other parts of the world, where Toyota’s factories depend on at least some Japanese-made components.

Shortly after the March disaster, Toyota suspended overtime work at its U.S. operations. It now says that from this Friday through June 3 North American plants will operate at half capacity on Tuesdays, Wednesdays and Thursdays and shut down entirely on Mondays and Fridays.

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