Toyota Back to Work as 84% Profit Drop Looms

Published Mon, Mar 28th, 2011   Wall Street Daily Research

Although Toyota originally expected production to resume on March 16, workers are just now returning to some of the company’s factories in Japan.

On Monday, Toyota resumed production of three hybrid cars – the Prius and two Lexus models – at two factories in central and southern Japan. All of Toyota’s 18 factories had been closed since the March 11 multiple disaster triggered by a 9-magnitude temblor.

One Toyota factory worker said, “We don’t know if we can get all the parts, but as long as the factory is operating, I am relieved.”

The partial resumption of Toyota’s operations comes as Deutsche Securities slashed its forecast for Toyota’s operating profit for the next business year by a whopping 84%.

Deutsche also cut its profit forecasts for rival automakers including Honda and Nissan.

As we already warned about Toyota on March 15, Deutsche also sited the possibility of a prolonged production suspension, following Japan’s biggest earthquake on record.

The aftershocks continue to be felt as far away as the United States, where Toyota plans to reduce its output.

A shortage of a Japanese-made auto paint pigment has also prompted some U.S. automakers to temporarily restrict orders for several colors.

Bottom line: Toyota workers return to two factories to restart production of three hybrid models later than originally suspected. Despite the resumption, Deutsche Securities cuts its profit forecast for the carmaker by 84%.