Toyota quarterly profits drop but recovery expected

Toyota production line
Image caption Japanese car makers have been struggling with parts shortages since the 11 March disaster

Japanese carmaker Toyota has said its profits for the first three months of 2011 were down 77% because of the disruption from March's earthquake.

Net profits for January to March fell to 25.5bn yen ($315.5m; £192.7m).

But for the financial year ending in March, Toyota's income doubled showing that it had been recovering from its recall crisis before the quake hit.

Toyota also said Japanese production would reach 70% of normal output in June, a month earlier than expected.

Many car manufacturers have been dealing with parts shortages because of the damage caused by the earthquake and tsunami that hit Japan on 11 March.

Toyota said parts shortages now affected 30 components, down from 150 originally affected by the disruption.

The world's biggest carmaker has curbed production at its factories in Japan and overseas.

Missing parts

On Wednesday, Toyota president Akio Toyoda said he expected the company's car manufacturing in Japan and abroad to recover to 70% of its capacity before the earthquake by June.

A full recovery is not expected until late this year.

The company, which makes the popular Prius hybrid, did not provide a forecast for the year ahead because of continuing uncertainty about when its parts supply chain will be back to pre-earthquake levels.

Toyota is expected to lose its spot as the world's top-selling carmaker to General Motors this year because of the impact of the disasters.

The company makes a higher proportion of its cars in Japan than other Japanese firms - 38% compared with Honda's 25%.

Like other major Japanese exporters, Toyota is also suffering because the strong yen makes its products more expensive for foreigners to buy.

The company says it needs the yen to be at 85 yen to the dollar, but currently one dollar buys only 80 yen's worth of goods.

Toyota's president, Akio Toyoda, told a conference that making cars in Japan was likely to continue to present tough challenges, with other problems including the still-damaged power supply and the risk of aftershocks disrupting the supply chain again.

He said he remained committed to Japan and protecting jobs there: "I love Japan, and I want to keep the tradition of manufacturing strong here."

His chief financial officer, Satoshi Ozawa, said that Toyota needed help from the government: "As long as the president is saying, 'Let's keep fighting and get through this' we will do that.

"But as the one responsible for the coffers, I have to say that the current environment makes it very, very difficult."

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