Toyota outlook cut to negative despite sales rise forecast

Toyota Motor has seen its outlook cut to negative by Moody’s Japan K.K. despite forecasting sales to grow by one-fifth in the coming year.

The company – currently the world’s largest car maker – is a key holding of a number of Japan-focused retail funds including the £1.1 billion GLG Japan Core Alpha fund.

Moody’s revised its outlook on the corporation’s Aa3 rating from stable to negative on the back of the strengthening yen and factors such as supply chain disruption caused by the March 11 earthquake and the recent floods in Thailand.

“The change in outlook reflects the likelihood that the recovery in Toyota’s profitability will be more protracted than anticipated due to the company’s significant exposure to the strong yen,” the ratings agency says.

“This foreign exchange pressure is compounded by eroding macroeconomic conditions in certain core markets and Toyota’s weaker competitive position following product quality issues.”

According to Toyota’s sales and production plans for 2012, which were published today, the company expects its worldwide sales to increase by 20% to 8.48m vehicles. Japanese sales are expected to jump by 28% to 1.53m vehicles, with exports tipped to rise by 19% to 6.95m.

The company is in the top-ten holdings of Stephen Harker and Neil Edwards’ GLG Japan Core Alpha fund, where it accounts for 3.8% of the portfolio. It is also owned by the Aberdeen Global Japanese Equity, GAM Star Japan Equity and Schroder Tokyo funds, among others.

Toyota’s shares are currently down 0.6% on the Tokyo Stock Exchange, trading at 2,496p.

Earlier this month, the company lowered its earnings forecast for the year ending March 2012 from ¥450 billion (£3.68 billion) to ¥200 billion, attributing the fall to the Thai floods and the strong yen.

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