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TOKYO (Feb. 6) -Toyota forecast its first annual net loss since 1950 on Friday as plunging demand for cars, especially in the U.S., and the strong yen pummeled earnings at the world's No. 1 automaker.

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Toyota Motor Corp. reported a 164.7 billion yen ($1.8 billion) loss for the October-December quarter, down sharply from the 458.6 billion yen profit for the same period the previous year. Quarterly sales plunged 28.4 percent to 4.8 trillion yen.

Joining a string of Japanese companies that are now expecting to slide into the red for the year, Toyota said it expects a net loss of 350 billion yen ($3.85 billion) for the fiscal year through March — a stunning reversal from the record 1.72 trillion yen profit it posted the previous year.

In December, Toyota, maker of the Prius hybrid and Camry sedan, thought it would eke out a small annual net profit, but the outlook has darkened since then, particularly as the U.S. auto market has collapsed.

"Toyota is having serious problems responding," said Yasuaki Iwamoto, analyst with Okasan Securities Co. in Tokyo. "It boasts a full and global lineup of products. But the world's auto demand changed in a flash."

Since the company can't count on global sales picking up next fiscal year, at best it can aim to cut costs to minimize the damage, Iwamoto said.

The last time Toyota had the equivalent of a net loss was in 1950, when it reported just parent results under different accounting standards than it uses now. It has not had a quarterly net loss since it began reporting quarterly numbers in 2002.

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Toyota, which last year overtook General Motors Corp. to become the world's best-selling auto company, is shutting down production at its 11 plants in Japan for 14 days during the first three months of this year, and further such suspensions may be needed.

The company announced no further job cuts Friday. It has said it plans to reduce the number of contract workers — who lack most of the benefits given to regular salaried workers, as well as the tacit guarantee of lifetime employment — from 8,800 in June last year to 3,000 in March.

The rapid rise of the yen against the dollar, euro and other currencies, which reduces the value of overseas earnings, also hurt results.

Executive Vice President Mitsuo Kinoshita promised Toyota will turn itself around through cost cuts and new products. He said Toyota continues to be committed to developing gas-electric hybrids as a pillar of its growth strategy.

"By taking these measures, we will overcome the current crisis and evolve into a company with a higher level of efficiency and resilience," Kinoshita said.

Last month, the company tapped as incoming president a member of the founding family, Akio Toyoda, an executive vice president who at 52 is considered young by Japanese standards for heading a major corporation.

Toyota officials and analysts say he can help bring employee ranks, group companies and dealerships together during hard times because he has the special charm of a Toyoda.

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Just a few hours before the earnings were released, Moody's Investors Service lowered its top credit rating of "Aaa" on Toyota by one notch to "Aa1," citing fears about its profitability.

Toyota's global vehicle sales for the October-December quarter shrank by 443,000 from the same period a year earlier to 1.84 million as sales dropped throughout the world, including North America, Europe, Japan and other Asian nations, it said.

The dramatic contraction in the American vehicle market has been particularly painful. In January, Toyota's U.S. sales dropped 32 percent amid a 37 percent contraction in the overall U.S. market.

Toyota lowered its global vehicle sales forecast for the fiscal year by 220,000 from its December forecast to 7.32 million. It now expects 21 trillion yen in annual sales, down from a record 26.3 trillion yen the previous year.

The company also said its yearly operating loss will balloon to 450 billion yen, worse than its earlier forecast of a 150 billion yen loss. That would be the company's first operating loss in 70 years. Operating income excludes taxes and other items included in net profit, and often gives a picture of a company's core business.

Until the U.S. financial crisis erupted last year, Toyota had been on a roll, boosting profits each year for seven straight years, riding on the success of its fuel-efficient models.

Other big Japanese exporters are suffering, too. Electronics makers Sony Corp. and Panasonic Corp. are both forecasting losses for the fiscal year through March.

Honda Motor Co., Japan's second-biggest automaker, expects to stay in the black for the year through March with a 80 billion yen profit, although that's down 87 percent from a record 600 billion yen the previous year.

Nissan Motor Co., the nation's No. 3 automaker, reports earnings Monday. Smaller automakers Mitsubishi Motors Corp. and Mazda Motor Corp. have already projected losses for the fiscal year.

Toyota shares rose 1.6 percent to 3,050 yen. Toyota announced earnings after trading ended in Tokyo.

Copyright 2009 The Associated Press. The information contained in the AP news report may not be published, broadcast, rewritten or otherwise distributed without the prior written authority of The Associated Press. Active hyperlinks have been inserted by AOL.

2009-02-06 05:44:22

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HSSteenent 12:18:08 PM Feb 09 2009

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If the Domestic car companies can produce a car of comparable value for the same price as A foreign tag. Then why do we critisize them for being able to pay their workers more? What difference does it make to the consumer? It sounds like the foreign badges are short changing their workers to me. I thought we wanted to work for companies that gave their workers a better deal. What's with the jealousy?

HSSteenent 11:46:07 AM Feb 09 2009

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You wish for your fellow Americans to buy your product or service but you abandon them for a foreign cheaper product. Then you cry foul because someone calls you on it, all the while contributing to the conditions which make it impossible to find a made in America product. Just one example of how this happens, back when Americans invented flat screens and a handfull of startups were making them Toshiba flooded the market with below cost screens and bankrupted the competition. So who's fault is it if those who want to buy American can't. How is the lack of available American wares justification for more of the same?

Christi333 10:06:15 AM Feb 08 2009

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leedirella1979 08:56:48 PM Feb 06 2009 - All these people who say buy American company automobiles are the same ones who buyJapanese manufactored television sets, cellular telephones, and audio equipment. If they are so patriotic, why do they purchase these other items? *** IT MAKES A HUGE DIFFERNCE. MIcorsoft, Mac, Dell, ATT they are all AMerican companies. Their profit is spent in AMERICA! they support our education programs and music and art and local events and museums.. Forgegn companies do NONE of that! BUY FROM AMERICAN COMPANIES! IT DOES MATTER!!

MSen121324 06:54:24 AM Feb 08 2009

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Crimson00King 08:22:27 PM Feb 06 2009 re this idiotic quote!!! Have buddy you sound like a prejudice person!!! does this type of action also go for the color of one skin or hair color. What kind of tvs do you own in your "trailor?" r they american made? I do not think so . YOU ARE A HYPOCRITE!!!!!Report This! Good it is time American stop buying these rice burners the people who own them are traitors and should be treated as such. I DO NOT allow any import parked near my home. I will never let one in in high trafic either. I will ask my waitors and waitresses what kind of car they drive and I will tip accordingly

MACKSWORLD 09:13:35 PM Feb 07 2009

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Toyota halts production at its Alabama plant and assigns its workers to push a broom instead of laying them off. yeah right...sounds awful like a jobs bank to me. Toyota and the southern and western senators railed against aid for Detroit citing the "jobs bank" as the ill that caused all. Well guess what. Nobody is buying Toyotas either...I hope they fail and Alabama gets hammered by 10 hurricanes next year and you need government help. Bet that would change your s****y attitude!

MACKSWORLD 05:59:34 PM Feb 07 2009

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This is good news. My how the mighty has fallen! After years of hearing how great Toyota Trash is, its their turn to stand in the soup line. I wonder how the folks in the South will feel when they too need to get bailed out !!! What goes around...

CPatAustin 10:30:10 AM Feb 07 2009

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CJS, you state that America's poor and hungry are growing at an enormous rate. That's not true, but even if it were, that's nothing that contraception wouldn't cure.

CPatAustin 10:28:25 AM Feb 07 2009

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Ironman, if Congress allows the "Buy American" provisions into the stimulus package, overpaid unions like the UAW are only going to maintain their hardline about refusing to get paid like other autoworkers. Why should the taxpayers subsidize them?

CPatAustin 10:26:38 AM Feb 07 2009

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I get a kick out of some of the non-economists whining about globalism. When's the last time you went out of your way to pay more for a product that was domestically made? It sure didn't help matters when that local labor, as in the UAW, demanded wages and benefits out of line with what other employers were paying their local workers. You can only ignore the laws of the marketplace for so long before you fold. Given a choice, American consumers like to get more for less. Who wouldn't?

CPatAustin 10:25:22 AM Feb 07 2009

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