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Is Toyota Facing Financial Trouble?

Japanese giant receives unexpected warning.

by on May.31, 2013

Toyota boss Akio Toyoda with the Lexus ES.

There was a time when Toyota was said to have “more money than God by one of its key competitors. And its latest earning report was unquestionably impressive. Nonetheless, the Japanese giant has received an unexpected warning that could signal financial troubles ahead.

Though Moody’s has given Toyota’s latest bond offering a strong “Aa3 rating,” it also has issued a negative outlook for the future that reflects potentially broader problems with the Japanese economy.

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“While disruptions caused by several natural disasters contributed to (a) period of underperformance, the company’s financial results have also suffered from product quality issues, market share erosion, and cost pressures exacerbated by volatile market conditions,” the ratings agency explains. “Because it is more reliant than its peers on units and components exported from Japan, Toyota’s earnings have significantly weakened because of the fluctuation in the currency market since the financial crisis of 2008-09.”