Toyota sees profit sliding 20 percent on U.S. sales incentives, yen gain

Wed May 10, 2017 8:11am EDT
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By Naomi Tajitsu

TOKYO (Reuters) - Toyota Motor Corp (7203.T: Quote), Japan's biggest automaker, forecast operating profit for the current year to slide by a fifth due to increased spending to push sales in a slowing U.S. market and the lingering impact from a stronger yen.

The prediction of a second straight year of profit decline by Toyota comes at a time when data shows a strong run of U.S. demand for cars seen in the past several years may be ending.

The financial setback would pose a challenge to the world's second largest automaker in sustaining big investments in fast-growing new technologies such as automated driving functions and artificial intelligence.

Toyota said on Wednesday that as revenue growth slows, it would have to prioritise areas of investment to maintain profitability, without specifying which areas.

It forecast operating profit falling to 1.6 trillion yen ($14.06 billion) in the year to March, following on the heels of a whopping 30 percent tumble in the year just ended, when it took a massive hit from a stronger yen.

"In the sporting world, two years of falling profit would be considered a losing streak, and I hate losing," Toyota President Akio Toyoda said at a results briefing.

To improve profitability, the company aimed to build on the cost reduction efforts enacted last year, Toyoda said, adding it will also focus on selling larger vehicles.

Globally, Toyota and its group companies aim to sell 10.25 million vehicles in the year to March, largely unchanged from last year.   Continued...

A woman walks past Toyota Motor Corp's C-HR model which is displayed at its headquarters in Tokyo, Japan, February 6, 2017.  REUTERS/Kim Kyung-Hoon