Toyota returns to the black in second quarter

Christine Tierney / The Detroit News

Toyota Motor Corp. returned to profit in the second quarter, winding up a better-than-expected earnings season for Japan's leading automakers.

Toyota said on Thursday that it still expects to lose money for the full fiscal year ending March 31, 2010. But it reduced its loss forecast by more than half, to $2.15 billion from $4.9 billion.

Toyota, like its Japanese rivals, benefited from "cash for clunkers" programs in many regions that stoked demand for small and fuel-efficient cars. It also has been cutting costs rigorously after losing $4.3 billion last year -- its first annual loss since 1950.

Honda Motor Co. and Nissan Motor Co. also sank into the red toward the end of the last fiscal year. But Honda is already profitable, and last week it tripled its full-year profit forecast.

Nissan also was profitable in the quarter ended Sept. 30, the second quarter of the Japanese fiscal year. Its profits were more than double analysts' forecasts.

Toyota eked out a net profit of $232 million, in the second quarter. While that is down 84 percent from last year's earnings, it was a far better result than anticipated.

On an operating basis, Toyota earned $617 million, surprising analysts who were expecting a loss.

"We view the results as impressive," Noriyuki Matsushima, a Tokyo-based analyst for Citigroup, said in a research note. He said he expected Toyota's results to exceed its full-year forecasts.

"Toyota is adopting a comprehensive cost review, from minor savings measures to such high-profile steps as the withdrawal from Formula One auto racing, and we think it could beat its cost-reduction target," Matsushima said.

The automaker raised its full-year sales forecast to 7.03 million vehicles, an increase of 430,000 from its earlier forecast. Toyota produced 7.6 million vehicles in the previous fiscal year that ended March 31.

Company officials cautioned, however, that the outlook remains uncertain. Demand is recovering slowly in many regions, and Japan's automakers also are contending with a strong yen that cuts into export earnings.

Toyota Managing Officer Takuo Sasaki said on a teleconference with investors that the yen's appreciation to 90 yen per dollar from 96 yen in the first half of the year would have a negative impact of 100 billion yen, or more than $1 billion. A year ago, the dollar was worth 108 yen.

ctierney@detnews.com (313) 222-1463