Toyota

Toyota (TM 67.51, -12.86) reported a fiscal second quarter net profit drop of 69% and cut its full year forecast by more than half due to a steep drop in U.S. sales, the credit market turmoil and the strengthening yen.

In its first half, sales declined 6.3%, operating income fell 54% and net income dropped 47.6%.  The yen strengthened 12.3% against the dollar during the half and was nearly flat against the euro. The number of vehicle sales fell only 1.2% as strength in emerging markets helped offset a 9.4% decline in U.S. sales.

Toyota expects business to worsen through the rest of the year. For the full year, Toyota expects a 12.5% decline in revenue, a 74% drop in operating income and a 68% drop in net income.  Toyota expects the yen will increase in value by 10.7% against the dollar and 11.0% against the euro. The number of vehicle sales are forecast to decline 18% in the U.S. and 7.6% worldwide.

The Wall Street Journal reports Toyota's full year profit outlook is down 56% from its previous guidance, 68% from the previous year and the lowest since 1999.

The dour outlook from Toyota, considered one of the best auto companies, demonstrates the serious challenges U.S. automakers General Motors (GM 5.05, -0.51), Ford (F 2.00, -0.09) and Chrysler face.

GM reports third quarter earnings on Friday and is expected to announce important changes to its automotive operations.  The consensus estimate calls for a loss of $3.51 per share.