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UPDATE 1-Toyota braces for stalling profit after last year's bonanza

* Net profit seen falling 2.4 pct in current fiscal year

* Year ended March 31 brought record net profit, up 90 pct

* Fading forex boost a new challenge for President Toyoda

(Updates with profit outlook, results, Toyoda comments)

TOKYO, May 8 (Reuters) - Toyota Motor Corp warned earnings may fall this fiscal year as the export-boosting tailwind that it and other Japanese carmakers have received from the yen's sharp depreciation over the past 18 months runs out of steam.

For President Akio Toyoda, the "lull" in prospect offers a different challenge to the major events that have marked his five years in charge, like the massive recalls of 2010, Japan's 2011 tsunami and the boycott of Japanese products by Chinese consumers following a territorial dispute in late 2012.

The world's best-selling automaker said on Thursday it expects net profit to fall 2.4 percent to 1.78 trillion yen ($17.5 billion) in the financial year to March 2015. That's well short of the 2.03 trillion yen mean estimate of 24 analysts surveyed by Thomson Reuters I/B/E/S.

While Toyota typically issues conservative guidance, the decline is a marked reversal of a near doubling in net profit to a record 1.82 trillion yen for the year ended on March 31, buoyed by exports.

As Toyoda briefed reporters in Tokyo, he explained that this year's earnings may decline as Toyota rides out a shrinking Japanese auto market, hit by a sales tax hike in April, and a hiatus in vehicle launches. In future, he said, he wants a Toyota that can develop stable long-term growth rather than swinging between extremes of profit, like last year, or loss after major recalls or natural disasters.

"I want Toyota to be a company that can continue growing, and that can avoid sharp setbacks or even maintain growth during times of crisis such as the Lehman shock," Toyoda said, adding that Toyota will invest more in training its employees as well as research and development to boost its competitiveness.

"Sustainable growth is our most important goal, so what is essential is how this lull will lead to growth in the future," he said.

FIRST FALL IN 3 YEARS

In early reactions, observers described Toyota's projections in pallid terms.

"In their sales projections, they're showing some confidence in the North American market where they're projecting growth, but it remains a market where competition is tough," said Yoshihiro Okumura, general manager of the research department at Chibagin Asset Management. "

"The scaled-back plans for Japan probably have factored in the impact of the increase in the sales tax. However you look at it, there is little new here to make you want to buy the stock."

This year's forecast marks the first time in three years that the home of household-name models like the Corolla sedan and the Prius hybrid expects net profit to drop.

The dollar has risen nearly 30 percent against the yen since mid-November 2012, when it first became clear that Shinzo Abe, who has been pledging to boost Japan's economy, would take power as prime minister with measures that have weakened the domestic currency.

Yet the decline in the value of the yen versus major currencies like the U.S. dollar and the euro appears to have run its course, after boosting the profitability of Toyota's export sales to major markets like the United States. Last year currency moves boosted Toyota's operating profit by 900 billion yen.

The company this year expects foreign exchange movements to be a negative factor for its earnings, slicing 95 billion yen off its operating profit. The company expects a marginal increase in operating earnings this year, up 0.3 percent to 2.30 trillion yen.

"Toyota is temporarily entering a lull this year as it gets ready for next year and beyond," said Koichi Sugimoto, a senior analyst at Mitsubishi UFJ Morgan Stanley Securities, speaking before Thursday's disclosure. Sugimoto said Toyota isn't expected to launch key new vehicles, including the remodelled Prius hybrid, until the fiscal year beginning April 2015.

CONSERVATIVE VIEWS

The conservative forecast echoes that of its peers. Rival Honda Motor Co said late last month that it sees net profit for this financial year growing just 3.6 percent, with weaker emerging markets' currencies biting into profits.

Toyota subsidiary Daihatsu Motor Co said it expects net profit to fall 2 percent this year, while five out of seven auto parts makers in the Toyota group see profits down this year, including Denso Corp and Aisin Seki Co.

Toyota has relentlessly cut around 300 billion yen in costs each year. Unlike rival automakers Nissan Motor Co and Honda that have been in expansion mode, Toyota has put a freeze on building new plants for three years since around early 2013.

But for it to bolster growth, analysts say it must now invest more, especially to increase production capacity and marketing.

"Toyota is reaching a turning point at which it will move from its emphasis on defence to significantly more active commitment to growth," Jefferies analyst Takaki Nakanishi said in a report before the Thursday forecasts were issued. Nakanishi said there's an expectation that Toyota could soon show how it plans to expand capacity, though executives didn't disclose such plans on Thursday.

Toyota said its capital expenditure would increase marginally in 2014/15 to 1.02 trillion yen from last year's 1.0 trillion yen.

Toyota expects to sell 2.21 million vehicles in Japan in the year to March 2015, down 6.6 percent from last year, while overseas sales were seen growing 2.1 percent to 6.89 million vehicles. Toyota's group sales figures include Daihatsu Motor Co and Hino Motors.

($1 = 101.7150 Japanese Yen)

(Reporting by Yoko Kubota; Additional reporting by Hirotoshi Sugiyama; Editing by Kenneth Maxwell)