Hammered by a strong yen, the end of green car incentives at home and the cost of reining in quality and safety issues, Toyota Motor Co. is reporting a sharp, 39% decline in its fiscal third-quarter net earnings, but the maker now expects full-year profits to come in at 40% above previous forecasts, largely driven by sales in emerging markets.
While vehicle sales slipped during the October – December quarter, the world’s largest automaker also predicts sales will recover and see a slight increase before the fiscal year ends on March 31st. Toyota just narrowly maintained its lead over global second-ranked General Motors during the 2010 calendar year, but the Japanese maker now anticipates selling 7.48 million vehicles worldwide for its current fiscal year, an increase of 70,000 over its earlier forecast.
Though the third-quarter was a challenging one, a survey of industry analysts suggests the results were in line with, or slightly better than, most had forecast. Net income dipped to 93.6 billion yen, or $1.14 billion at the current exchange rate.
A variety of factors can be pointed to for Toyota’s recent problems. There are higher material costs. The Japanese home market suffered a downturn due to the government’s cancellation of the green car incentive program. And sales in North America took hits – despite the general recovery of the U.S. economy – due to the apparent impact of the maker’s ongoing safety problems.