Toyota profits will fall, but there's a silver lining

Toyota profits expected to fall 31 percent. But post-tsunami recovery is happening faster than expected. Sales to dip only slightly and Toyota profits forecast at $3.5 billion.

Koji Sasahara/AP
People walk in the showroom of Toyota Motor's Tokyo headquaters in Tokyo June 10, 2011. The automaker forecast that Toyota profits would dive 31 percent in an outlook that assumes a robust recovery from the earthquake and tsunami in the coming months.

Almost three months after an earthquake and tsunami shut down Toyota's Japanese plants and caused a slow down in global production, Toyota is bouncing back faster than expected.

In fact, Toyota told analysts today that it expects to see only a slight dip in sales for the fiscal year ending in March 2012.

As one analyst told me, "These guys are coming through this crisis much better than you would have thought a couple months ago."

Let's be clear, Toyota's profit is taking a hit, forecast to drop 31%, and will come in below some of the estimates already out there. But keep in mind, those estimates are all over the place. Toyota now expects to make $3.5 billion for the '12 FY. Most of that profit will come in the second half of the year when Toyota's production will bounce back.

That's the headline at Toyota these days. The company is getting back up to speed and doing it much faster than originally forecast. It doesn't mean the world is perfect for Toyota. Far from it. Profits are still getting hammeredby the strength of the Yen and the fact so much of its production is based in Japan.

Toyota CEO Akio Toyoda is caught between a rock and a hard spot. Any other CEO in any other business facing the reality that producing at home is hurting profits, would slow down or shut some of the assembly lines. But for Mr. Toyoda, shutting plants in Japan after the devastation of the earthquake, would cause a backlash the company (and Japanese politicians) would like to avoid.

With all that said, Toyota is getting back up to speed, and it's happening faster than many predicted in late March and early April.

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