Moody's Sees Toyota Profit Margins As Under Pressure
NAGOYA, April 17 (Kyodo) — Moody's Japan K.K. said Tuesday that Toyota Motor Corp.'s profit margins "have come under pressure" as the company has failed to raise prices in overseas markets or reduce costs enough to offset the strong yen.
The dollar's current weakness around 80 yen will remain a drag on Toyota's cost competiveness against foreign automakers, it said, after revising downward to "negative" last December its outlook for Toyota's Aa3 long-term debt rating.
The debt rating agency said Toyota's group operating profit in the 2012 business year ending next March would rise to some 1 trillion yen, still 50 percent lower than the peak in fiscal 2007.
In response to the yen's appreciation, Toyota is expanding overseas output, using more overseas components for overseas production and increasing component imports for domestic production.
But the changes will take time before bringing about benefits, Moody's said. "Overseas production of vehicles and sourcing components from outside Japan will displace the current utilization of Toyota's domestic plants," it said.