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Toyota expects operating profit to drop for 2nd consecutive year

Toyota Motor Corp. said Wednesday it expects its group operating
profit to drop for a second consecutive year for the first time in 18
years in the current business year, as the strong yen and a slowdown
in its key U.S. market will take a heavy toll on its overseas
operations.

Japan's largest automaker projects a 19.8 percent drop in group
operating profit to 1.6 trillion yen ($14.1 billion) for the current
business year after posting a decline for the past year ended in
March, the first in five years.

Its group net profit is projected to fall 18.1 percent to 1.5
trillion yen on sales of 27.5 trillion yen, down 0.4 percent.

For fiscal 2016, Toyota posted a group operating profit of 1.99
trillion yen, down 30.1 percent from a record-high result the
previous year.

Group net profit dropped 20.8 percent to 1.83 trillion yen on
sales of 27.60 trillion yen, down 2.8 percent. Both operating and net
profit declined for the first time in five years.
"I want this year to be one in which we do everything we can to
take a critical look at our true selves and strive to improve our
competitiveness," Toyota President Akio Toyoda said at a press
conference in Tokyo.

"It's not only me that does not like to lose," he said,
referring to the forecast for a fall in group operating profit for a
second straight year.

Executive Vice President Osamu Nagata said Toyota will "make all
out efforts to make full recovery."

The automaker expects the dollar to average 105 yen, down from
108 yen the past year. Toyota also forecast a weaker euro rate of 115
yen, compared with 119 yen last fiscal year.

Toyota estimates the stronger yen could reduce its operating
profit by 110 billion yen this year.

Toyota's full-year earnings forecast reflects slower sales
expected in the U.S. market amid intensifying competition with rising
sales promotion incentives in the industry.

"The United States is still a key market for us. But incentives
have risen altogether in the industry and competition is fiercer...we
hope to not get involved in an overly heated incentive competition,"
Nagata said.

Toyota forecasts global sales of 8.90 million vehicles this
year, compared with 8.97 million vehicles in fiscal 2016.

In Japan, Toyota aims to sell 2.20 million vehicles, down from
2.27 million in fiscal 2016. In North America, Toyota plans to sell
2.82 million, down from 2.84 million the previous year. The targets
for Europe and Asia are set at 920,000 and 1.6 million respectively.

Nissan Motor Co. is scheduled to release its earnings results
Thursday. Honda Motor Co. said in late April it expects its group net
profit to slide from a year earlier in fiscal 2017 through next March
against the backdrop of a stronger yen and a downturn in sales in the
United States. (May 10)