Strong yen prompts Toyota to change currency assumption

Article by Christian A., on October 28, 2010

Toyota Motor Corp.’s President Akio Toyoda said that it is likely to revise its currency assumption for its full-year profit forecast to about 80 yen to the US dollar from 90 yen. In an interview with TV Tokyo, Toyoda said that he senses an “extreme sense of crisis” because of the strengthening currency.

He said that even if Toyota increases overseas auto assembly to lessen the negative currency impact from exports, Toyota seeks to maintain annual domestic production of about 3 million cars.

Last fiscal year, Toyota, the world’s largest automaker, had built 3.2 million cars in Japan out of 7.3 million units throughout the world. The strengthening Japanese currency reduces the value of repatriated profits from exports.

The yen, which is near a 15-year high, has gained 15% against the dollar and about 13% against the euro since the April 1 start of Toyota’s fiscal year. On Oct. 26, the yen traded at 81.53 to the dollar in New York.

Efraim Levy, automotive equity analyst at Standard & Poor’s in New York, said that the strong yen would clearly have an impact on earnings. He added that it “really comes down to where you think it’s going to go.” A “buy” is how he rates Toyota’s American depositary receipts. [via autonews - sub. required]

Topics: toyota

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