Toyota posts 3.6b dollar first half profit

November 5, 2010

, TOKYO, Nov 5 – The world\’s biggest automaker Toyota said Friday it had returned to a 3.6 billion dollar profit in the fiscal first half, despite the twin challenges of a strong yen and a global recall crisis.

The auto giant booked a net profit of 289.16 billion yen (3.6 billion dollars) for April-September compared with a net loss of nearly 56 billion yen in the same period a year earlier, when the sector was tanking.

The maker of the popular Prius petrol-electric hybrid posted a second-quarter net profit of 98.7 billion yen, a four-fold rise year-on-year, and raised its annual net profit forecast from 340 million to 350 billion yen.

At an operating level, Toyota Motor Corp. returned to a 323.12 billion yen profit in the six months to September from a loss of 136.86 billion yen in the same period last year, attributing the rebound to marketing and cost-cutting.

Operating profit "improved significantly despite the substantial negative impact from the strong yen," said Toyota\’s executive vice president Satoshi Ozawa, as the firm reported better figures in all global regions.

The Japanese currency has been trading at 15-year-highs against the dollar, hurting exporters such as Toyota by making their products relatively more expensive abroad and cutting into repatriated earnings.

Adding to its difficulties, Toyota will have to adapt to the end of green-car subsidies in Japan that boosted sales, especially of its Prius hybrid, after the global economic downturn.

Ozawa acknowledged the "very tough business environment, characterized by the radically and seriously appreciated yen in recent months, the risk of slowdown in demand recovery in the United States and Europe and falling demand following the end of the eco-car subsidies."

"Nevertheless, we will do our utmost… to deliver as many vehicles as possible to our customers while continuing to improve our profit structure through further fixed cost and variable cost reduction activities."

In its home market, the Prius stayed the top selling car for a 17th month in a row in October according to industry bodies quoted by Kyodo News.

The hybrid sold 21,769 units despite the end of the subsidies, in part due to a large backlog of orders, the Japan Automobile Dealers Association and the Japan Mini Vehicle Association said.

The wider rebound has come despite Toyota\’s safety recalls, which have tarnished its once stellar reputation.

The auto giant in late 2009 and early 2010 undertook a series of mass recalls of more than 10 million units worldwide.

The crisis prompted US congressional investigations as Toyota was hit with a record 16.4 million dollar fine to settle claims it had hidden accelerator pedal defects blamed for dozens of deaths.

Last month Toyota announced a global recall of about 1.5 million vehicles to fix a brake fluid leak, and on Thursday it announced a recall of almost 136,000 compact cars in Japan and Europe to fix a steering problem.

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