Moody’s Investors Service, the credit rating arm of Moody’s Corp. (MCO), has kept the credit rating of Toyota Motor Corp. (TM”>TM) unchanged at Aa3, despite warning of a possible downgrade. The rating agency has also affirmed its outlook on the company as stable.
At the end of June this year, Moody’s had cut the credit rating of the automaker by one level to Aa3 on the back of its weakening market position and difficulties in operations emanating from the earthquake and tsunami in Japan in March'11. At that time, the agency had warned about another downgrade given the deteriorating conditions in the Japanese economy after the earthquake.
The catastrophe in Japan damaged the plants of many parts suppliers that manufacture key components for cars and trucks in the U.S. and other countries. As a result, the disaster led to a substantial production loss at Toyota.
The Zacks #2 Rank (Buy) company revealed a profit of ¥1.16 billion ($14.21 million) or 37 yen cents per share for the first quarter of fiscal year ended March 31, 2012, which plummeted from ¥190.47 billion ($2.33 billion) or ¥60.74 per share a year ago.
The sharp fall in profit was attributable to a substantial decline in vehicle sales all over the world, especially North America and Europe due to disruptions in supply of parts caused by the earthquake and tsunami in Japan on March '11.
In Asia, the company has managed to maintain a similar level of vehicle sales compared with the previous year led by strong sales in Indonesia. Moreover, currency fluctuations had a negative impact on the company’s profit.
Revenues in the quarter dipped 29.4% to ¥3.44 trillion ($42.15 billion), driven by a 33% fall in global vehicle sales to 1.22 million units. The automaker had an operating loss of ¥108.0 billion in contrast to an operating profit of ¥211.66 billion in the first quarter of the previous fiscal year.
Although, Toyota upgraded its consolidated vehicle sales guidance for fiscal 2012 by 360,000 units from its previous forecast (announced in June 2011) to 7.24 million-7.6 million units, it expects revenues to be flat at ¥19.0 trillion compared with the prior year.
Toyota has lowered its estimates of operating income and net income by 3.9% and 4.5% to ¥450 billion and ¥390 billion, respectively.
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