Toyota forecasts 35% net profit fall this year on strong yen

The automobile firm profit hit by a sharp appreciation in the yen

Toyota Motor Corp forecast on Wednesday a bigger than expected 35 per cent tumble in net profit for the current year, snapping three straight years of record profit, hit by a sharp appreciation in the yen.

After net profit rose 6.4 per cent in the year ended March to 2.31 trillion yen ($21.26 billion), Toyota is forecasting it will drop this year to 1.5 trillion yen.That is far short of an average estimate of 2.25 trillion yen for the current year, based on predictions from 28 analysts polled by Thomson Reuters I/B/E/S.

Toyota said it was assuming the dollar would average 105 yen this year, versus a far more favourable 120 yen last year. Foreign exchange losses would therefore have a negative impact of 935 billion yen on operating profit this year, it said.

Toyota expects operating profit, which excludes earnings made in China, will drop 40 per cent this year to 1.7 trillion yen. That does not take into account any impact caused by production stoppages that followed the deadly earthquakes in southwestern Japan last month, it said.

Toyota, which was eclipsed by Volkswagen as the world's top-selling car maker in the first quarter, said it expected global sales to inch up to 10.15 million vehicles in the year to March, from 10.094 million last year.

($1 = 108.6600 yen)