Toyota shares plunge after shock profit warning
Shares of Toyota Motor Corp (7203.T: Quote, Profile, Research, Stock Buzz) plunged as much as 13 percent on Friday after the carmaker warned that its profits this year would hit a 13-year low amid the global economic downturn.
Toyota shares began changing hands in the afternoon, diving to their daily limit-low of 3,310 yen, after a flood of sell orders had kept them untraded in the morning, reported Reuters.
They ended the day down 9.2 percent at 3,460 yen.
The broader market declined sharply on Toyota's surprise outlook cut, with many likening it to the "Sony shock" in April 2003, when a huge quarterly loss by Sony Corp sparked a two-day sell-off.
Some investors said the situation was even worse for Toyota, given the deterioration in the global economy.
"The Sony shock came when the overall economy was on the rise, so it was taken as the end of the bad news, but this time, it is in the middle of an economic slowdown," said Tomomi Yamashita, fund manager of Shinkin Asset Management.
"Compared with the Sony shock, it will probably take Toyota's share price longer to return to a solid recovery path," he said.
Toyota shares fell 10 percent on Thursday ahead of the profit warning after a newspaper reported that its operating profit could fall below 1 trillion yen ($10 billion) in the year to March 2009, less than half the profit seen last year.
But the damage was much greater, with Toyota saying after the market close that it expected an annual operating profit of 600 billion yen -- the lowest since 1995/96 and down 60 percent from its previous forecast.
Brokerages cut their ratings on the automaker. Credit Suisse downgraded it by two notches to "underperform," and UBS reduced its rating to "neutral" from "buy."
"(Toyota's) second-half earnings could fall into the red if the current forex levels continue," Credit Suisse analyst Koji Endo wrote in a report.
Shares of rival automakers and Toyota group firms also plummeted as the profit warning painted a grim outlook for the industry. Honda Motor Co Ltd (7267.T: Quote, Profile, Research, Stock Buzz) fell 8.7 percent to 2,260 yen, while autoparts maker Denso Corp (6902.T: Quote, Profile, Research, Stock Buzz) declined 15 percent to 1,756 yen.
The Nikkei average .N225 fell 3.6 percent, while the transport sector subindex declined 8.5 percent.