Moody’s Investors Service, the credit rating agency operated by Moody’s Corp. (MCO), warned that it may downgrade its credit rating for Toyota Motor Corp. (TM) on the backdrop of earthquake and tsunami in Japan on March 2011 that will adversely affect the financial results of the company.
The catastrophe in Japan damaged many parts supplying companies’ plants that manufacture key components for cars and trucks in the U.S. and other countries. The disaster led to a production loss of 260,000 cars for the company from March 14. As a result, Toyota remained uncertain about resuming its full production in Japan.
Production resumed at only two of the 18 plants in Japan since March 28 that build Toyota and Lexus cars. Those plants are assembling a limited number of three hybrid models at a reduced rate. Production at those plants account for only 3%–4% of normal capacity.
Toyota revealed that it would resume limited production at its plant in Kanagawa, west of Tokyo, on March 11. The facility will manufacture Corolla Axio and minivan Raum models.
Currently, Moody’s set Toyota’s long-term uncollateralized debt rating at Aa2. The rating agency will review Toyota’s credit rating based on its ability to restore production in Japan.
Almost all the Japanese automakers, including Honda Motor Co. (HMC) and Nissan Motor Co. (NSANY), are plagued by the natural disaster in the country. They have suspended and cut down their production in the wake of plant outages and parts supply shortage.
Toyota, a Zacks #3 Rank (Hold) stock, posted a 39% fall in profit to ¥93.63 billion ($1.14 billion) or ¥29.86 (36 cents) per share in the third quarter of fiscal 2011 from ¥153.22 billion ($1.86 billion) or ¥48.86 (59 cents) per share in the year-ago quarter. The fall in profit was attributable to lower sales in the Japan, North America and Europe as well as stronger yen.
Consolidated revenues in the quarter dipped 12% to ¥4.67 trillion ($56.74 billion) on the back of a 13% fall in global sales volume to 1.8 million units. Vehicle sales declined 21% to 507,861 units in North America, 31% to 402,476 units in Japan and 5% to 207,621 units in Europe. Meanwhile, sales rose 21% to 334,504 units in Asia and 2% to 349,219 units in Other regions.
HONDA MOTOR (HMC): Free Stock Analysis Report
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