Cost-Cutting is a Worldwide Emergency for Toyota

Despite what Toyota calls "Emergency Profit Improvement" cost-cutting, a severe drop in worldwide sales pounded Toyota earnings in the latest quarter.

Toyota had a net loss of about $802 million in the quarter ended June 30, versus net income of about $3.4 billion in the year-ago quarter, the company announced on Aug. 4. The quarter just ended was the first quarter of Toyota's 2010 fiscal year.

Toyota's Japanese rivals Honda and Nissan did better in the same quarter. Honda managed a razor-thin profit of about $79 million. Nissan had a net loss of about $170 million.

All three are hurting in North America, but especially Toyota. Toyota's North American sales fell 47 percent in the quarter to 387,000 units. Worldwide, Toyota's unit sales fell 36 percent to about 1.4 million.

"Although we were able to make certain improvements in fixed cost and cost reduction efforts, the decline in vehicle sales and the appreciation of the Japanese yen had a severe impact on our earnings," said Toyota Senior Managing Director Takahiko Ijichi.

One small positive note was that Toyota increased its forecast for worldwide sales to 6.6 million units from 6.5 million, for the fiscal year ending March 2010. That was because of improving vehicle sales in Japan.

Chart: Toyota