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Strategies & Market Trends : JAPAN-Nikkei-Time to go back up? -- Ignore unavailable to you. Want to Upgrade?

To: borb who wrote (1615)	11/18/1998 5:45:00 AM
From: fut_trade	Read Replies (2) \| Respond to of 3902

Toyota profits seen eroded by dull Japan sales By Edmund Klamann TOKYO, Nov 18 (Reuters) - Toyota Motor Corp is expected to report a drop in profits for the latest business half-year, analysts said on Wednesday, as the protracted domestic slump takes its toll on earnings despite strong U.S. sales. Given the yen's recent rise against the dollar, eroding the windfall from a weak yen that boosted the yen-based value of Toyota's overseas earnings, analysts also expected the automaker would fall short of last year's record profit levels in the full fiscal year to next March 31. Toyota on Friday will report its earnings for the fiscal half-year to September 30, including, for the first time, its consolidated results, although these will not be based on U.S. Securities and Exchange Commission standards. The company has told analysts it expects a parent current profit, which is pretax and includes non-operating income, of 230 billion yen ($1.9 billion), down from 324 billion yen a year earlier. Analysts expected Toyota would beat that forecast, bolstered by yen weakness in most of the half-year period, but the deteriorating domestic market was certain to keep profits below last year's levels. ''There's going to be a huge buffer effect as a result of the yen,'' said Jardine Fleming Securities analyst Stephen Usher. ''That will have made a contribution, but roughly 50 percent of total sales value is in the domestic market.'' ING Baring Securities analyst Kunihiko Shiohara said it appeared likely that Toyota would fall about 200,000 units short of its original domestic production and sales forecasts for the fiscal year. He also doubted the company could meet its goals of cutting domestic sales-related expenditures, given the need to aid dealerships reeling from the effects of sluggish demand and a severe credit crunch. ''If a dealership can't show a profit, the banks won't lend to it,'' he said. Toyota's domestic output fell to 1.5 million units in the first fiscal half-year, off 10.6 percent from year-ago levels, while domestic sales were down 7.0 percent at 802,533 units. In the United States, by contrast, Toyota's unit sales in the period totalled 723,652 units, up 17.2 percent from a year ago, according to industry data. The automaker's domestic woes have caught the attention of rating agency Moody's Investors Service, which in August downgraded its long-term debt to Aa1 from Aaa, reflecting severe conditions in the key domestic and Southeast Asian markets. Toyota had been the world's only automaker with Moody's top Aaa rating. On Tuesday Moody's also downgraded the outlook for Toyota's foreign-currency debt to negative from its previous stable status, in line with a downgrade of Japan's country ceiling for foreign debt. The first fiscal half-year was also an acquisitive period for Toyota, which took a majority stake in mini vehicle affiliate Daihatsu Motor Co and bought an additional 10 percent of Chiyoda Fire & Marine Insurance Co. Analysts doubted this would have a significant effect on the parent company's cash position, however. ($1=121 yen)