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Toyota Projects First Operating Loss in 71 Years

BY Admin  December 22, 2008 at 10:00 AM EDT

Katsuaki Watanabe, president of Toyota; AP photo

The carmaker will post a $1.66 billion loss for the fiscal
year ending in March, the company said in a statement Monday, according to the
Associated Press.

“The environment we’re in is extremely tough,”
President Katsuaki Watanabe told reporters in Nagoya. “We’re facing an
unprecedented emergency situation. Unfortunately, we can’t see the
bottom.”

The news prompted Moody’s Investors Service to consider
downgrading the company’s top, “Aaa” rating on $19 billion of debt.

The last time Toyota posted an operating loss was in 1938,
said spokesman Hideaki Homma, according to Bloomberg News.

Operating income reflects the company’s core business
performance and does not include taxes and certain other expenses. Last year,
Toyota had an operating profit of $28 billion, according to the AP.

Toyota’s sales in the United States, traditionally its most
profitable market, fell 34 percent in November.

The company reduced its vehicle sales forecast 8.5 percent
to 7.54 million for the year ending March 31.

Meanwhile, also citing reduced demand, U.S. carmakers
General Motors Corp., Ford Motor Co. and Chrysler LLC said they would shutter
about 59 factories over the next month.

Chrysler announced it will shut all of its plants for at
least a month, and Ford plans to idle nine of 15 North American assembly plants
in the first week in January.

On Tuesday, GM will shut down a sport utility plant in
Moraine, Ohio, which employs 1,080 people. The company’s Janesville, Wis., plant
also will stop making SUVs, putting 1,200 people out of work, according to the
AP.

Last week, the White House announced $13.4 billion in
federal loans for GM, the largest U.S. automaker, and No. 3 Chrysler. As part
of the plan, the two companies have a March 31 deadline to slash debt, rework
labor contracts and plan for thousands of job cuts or face government-ordered
bankruptcy, reported Bloomberg News.

Ford, the second largest U.S. automaker, has said it doesn’t
need emergency aid, but has asked the government to have a line of credit ready.