Group pre-tax earnings fell by 25 per cent to Y322bn (pounds 2.1bn), its third consecutive year of decline. Its profit is only a third of the record 1990 figure.
Masami Iwasaki, vice-chairman, blamed poor sales in Japan and the strength of the yen, whose value rose by more than 10 per cent in the final quarter. 'The circumstances were very severe,' he said. 'We are making the utmost efforts to avoid losses.'
But he said Toyota had no plans to close any factories, unlike Nissan, which is to shut a large plant near Tokyo after suffering a Y108bn loss in the year to March.
Toyota is almost unremittingly gloomy about prospects for the current year. Even though it expects the home economy to recover slowly, it said: 'Worldwide, a number of factors make the outlook less promising, including the trend of the US and European economies and the rapid fluctuation of exchange rates.'
Officials indicated that group profit this year would be about Y240bn, a further 25 per cent decline. But Mr Iwasaki said this assumed an exchange rate of Y110 to the dollar, compared with its current level of Y104. 'If the dollar falls below Y100, no manufacturing companies will be able to exist,' he said.
According to the consultant DRI/McGraw-Hill, every time the Japanese currency strengthens by a yen, Toyota loses dollars 50m. 'Only its cost-saving programme stands between the company and losses,' DRI's John Lawson said.
No employees have yet been made redundant, but Toyota has been cutting its overtime from the long-established 20 per cent level, in effect forcing a pay cut. Mr Lawson said Toyota 'is still an immensely powerful company financially, but is being severely weakened. They are going to have to work very hard to prevent the operating profit disappearing.'
Worldwide sales in the latest year were virtually stagnant, edging up 0.5 per cent to Y10,211bn, with higher sales in South-east Asia and Latin America almost offsetting a 0.7 per cent drop in domestic sales.
Toyota started production at its plant at Burnaston, Derbyshire at the end of 1992 and will produce about 30,000 cars there this year.Reuse content