Japanese automaker Toyota Motor Corp. (NYSE: TM) saw its profits plunge by 18.5 percent in the second quarter partially due to supply woes caused by the devastating floods in Thailand, where the company had a number of factories.
The company also suffered a larger-than-expected 32 percent drop in quarterly operating profit. Global vehicle sales slipped by 4.7 percent to about 1.81 million.
The persistently strong Japanese yen currency also hurt results.
In late October, the U.S. dollar dropped to a record low of 75.31 yen, leading to currency intervention by Japanese authorities.
As a result, Toyota has withdrawn its profit and sales forecasts for the full fiscal year given the continuing uncertainties posed by the Thai flooding.
Toyota shares are down about 2.0 percent in mid-morning trading in New York.
A spokeswoman for the company estimated that Toyota’s output was reduced by 150,000 vehicles due to the natural disaster in Thailand.
Yuuki Sakurai, chief executive of Fukoku Capital Management in Tokyo told the BBC: Floods [will] sustain for quite a long time... [the] recovery start from maybe… next year .”
Toyota also noted that will temporarily cease operations at its three plants in Thailand, while also cutting output in the U.S., Canada, South Africa, Malaysia, Indonesia, the Philippines, Vietnam and Pakistan.
Earlier in the year, Toyota also suffered reduced production due to the negative impact of Japan’s earthquake-tsunami.
Toyota’s chief financial officer Satoshi Ozawa conceded that the company’s domestic rival Nissan has been able to withstand the crises better.
I can't deny that Nissan may have done some things right, given the outcome of how they recovered from both the earthquake and the floods, he told a news conference. If there's something there to learn from, we'd like to do that.
Indeed, Nissan recently raised its profit forecast for the current fiscal year.
Still, Ozawa told reporters that demand for the emerging markets compensated from some of the sales losses incurred in the U.S. and Japan.
In Asia, despite a negative impact from the earthquake, we increased vehicle sales above the same period last fiscal year due to expanding sales in India, Indonesia and Thailand, he said.
However, Toyota faces a very challenging year, particularly given the economic crises in Europe and an apparent slowdown in the U.S.
Tetsuro Ii, chief executive officer of Commons Asset Management in Tokyo, told Reuters: [Auto] companies now need to adopt new ideas and move faster. Some companies, such as Nissan, are doing this well...It's too soon to make a judgment on Toyota's and Honda's long-term prospects, but I can't help but get the impression that they are slow in their reforms.”