Despite recall costs, Toyota posts $1.2B profit
By Justin Hyde
Detroit Free Press
WASHINGTON — Toyo-ta yesterday reported a $1.2 billion quarterly profit and boosted its financial forecast for the coming fiscal year, even as it revealed it had spent $1.1 billion on recalling 8 million vehicles worldwide.
The figures illustrate just how powerful the world's largest automaker remains despite months of turmoil over sudden acceleration cases and several probes by U.S. auto safety regulators, including a new one launched Monday into a 2005 recall.
Despite the recall's cost and lost sales, Toyota expects its next full-year profit to rise 48 percent to $3.3 billion.
The $1.2 billion profit for the quarter ending in March reversed an $8 billion loss in the same quarter of 2009, when the global auto market was bottoming out. Revenues rose 49 percent to $58 billion, slowed only slightly by a stronger Japanese yen that makes foreign sales less profitable.
But in North America, once the company's strong- est market, Toyota booked an operating loss of $233 million for the quarter, reduced from the $1.9 billion lost in the same period a year ago. Officials said in addition to spending $1.1 billion on recalls and quality improvements, the furor had cost the company roughly $800 million in lost sales worldwide.
For the entire fiscal 2010, Toyota said it earned $2.3 billion, reversing the $5.5 billion loss for fiscal 2009 that was the worst for the automaker since it was founded in 1937.
Much of the turnaround came from cost-cutting and Toyota's financial arm, as total revenues were down 8 percent.
Toyota CEO Akio Toyoda said he was grateful to the company's 7 million customers worldwide, and vowed to press forward with new technologies and expansion in China.
"I feel that, given these earnings, we are finally standing at the starting line," Toyoda said. "I believe that this fiscal year marks a truly fresh start for Toyota, and I would like to steer the helm toward new strategies for growth."
Toyota has boosted its rebates and interest-free loan offers to U.S. consumers in an attempt to win back customers, breaking with years of comment that incentives cheapened the brand.
Toyota also said it had booked a special cost for its entire fiscal year of about $550 million for the shutdown of the NUMMI plant in California, the former joint venture with General Motors and the only Toyota plant represented by the United Auto Workers. Toyota's North American production was about half its sales in the quarter.
The results came a day after U.S. auto safety regulators opened a fresh probe into Toyota's handling of a 2005 recall over faulty steering rods in older pickups, questioning whether the automaker delayed making the fix after issuing recalls in Japan.
Last month, Toyota agreed to a $16.4 million fine by the National Highway Traffic Safety Administration for delaying by at least four months the recall of 2.3 million vehicles to fix sticking accelerator pedals. Toyota paid the fine but denied NHTSA's conclusions that it had dragged its feet or broken U.S. laws.