Toyota's Bleak Outlook Disappoints, Shares Skid

Shares in Toyota Motor fell as much as 5 percent on Monday after it forecast a much bigger-than-expected $8.6 billion annual loss and said it would sell about 1 million fewer vehicles this year.

David Zalubowski / AP Toyota.

The global crisis has hammered demand for cars and pushed U.S. rival Chrysler into bankruptcy, and pushed Toyota to its first-ever operating loss for the year to March.

Analysts suggested Toyota, the world's biggest car maker, was being too conservative but the market appeared unwilling to look beyond the bleak outlook.

"Investors are reacting to the company's severe outlook going forward," said Kenichi Hirano, operating officer at Tachibana Securities.

"The forecast dampened investor appetite as they need to see the prospect for a V-shape recovery in the second-half of the business year in order to buy stocks."

Toyota shares dropped 160 yen to 3,820 yen, underperforming a 0.2 percent fall in the benchmark Nikkei share average. Its depository receipts fell only 1.3 percent on Friday after the Toyota results and forecasts.

While the mounting losses triggered the fall in Toyota's shares, Credit Suisse autos analyst Koji Endo said there was substantial potential for the firm to revise up its conservative earnings forecasts for the current year to next March.

"Compared to companies like Honda, which is in the black, and Suzuki, which will probably forecast a profit today, Toyota is still weak," Endo said.

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"But its loss would not likely be as big as 850 billion yen as the company had forecast. We expect it to be 500 billion yen or so," he added. 

"Still, it is in deep red nonetheless, so it's bad."

Rival Honda Motor last month forecast a small profit for this year, and Suzuki Motor is scheduled to announce earnings results and forecasts later on Monday.

Toyota booked a $6.9 billion loss for the January-March fourth quarter and cut its annual dividend for the first time since at least 1994, when it changed its reporting period.

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