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Toyota forecasts 35% profit dive on strong yen, slower emerging markets

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There is probably no greater incentive for government policy than preserving Toyota's profits so I expect some decisive action soon.

2 ( +2 / -0 )

So a huge company will only be able to make $200bn this year instead of $250bn? My heart bleeds....not.

2 ( +3 / -1 )

This story is akin to a Wall Street hedge fund manager complaining about making only $80m instead of $100m.

If Toyota actually shared their astronomical profits with their employees and their suppliers I might have some sympathy for their 'predicament'.

2 ( +3 / -1 )

One wonders if these companies couldn't hedge more of their foreign currency exchange rate risks.

Aso and Kuroda wouldn't need to worry about the impact of the yen on corporate profits if these companies managed this risk well.

JMHO, but Japanese economic growth ought be predicated on increased productivity, rather than the ebb and flow of a massive currency trade.

2 ( +3 / -1 )

This stuff always cracks me up. You hear a lot of it out of Detroit when Toyota has good news

"There is probably no greater incentive for government policy than preserving Toyota's profits so I expect some decisive action soon."

I always have this image of a Toyota executive talking to the Prime Minister asking that the BOJ force the yen lower so that Toyota can get a few hundred million in extra profits. Sure that happens. Right. So the Prime Minister says, "Gee, I can raise the price of everything for every resident of Japan by forcing the yen down, or I can tell Toyota that they will just have to make good cars and earn money the hard way." This enforcement of hardships on the masses might have happened in Taisho, but not now. And higher profits just means higher taxes and higher dividends. Oy vey. Like Toyota needs the headache.

Which brings me to my second point. Toyota is earning money the hard way, and it has been for decades. Yen goes up, they sell more cars. Yen goes down, they sell more cars. Let's not all miss the subtext of the article, which is that unit sales are up. Pluses and minuses here and there. I don't think they care. They will just keep making cars that people want.

fxgai. A lot of people don't want to hedge. Toyota has made a conscious decision to produce more products in Japan, and that cuts both ways. They have traditionally been ambivalent about it. Another aspect is that this is a profit figure, representing a very small percentage of total cash flows. If they hedged all cash flows, they might wind up paying more for the hedges than the likely profit volatility.

-1 ( +1 / -2 )

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