Toyota profit quadruples to $1.2B despite recalls

TOKYO (AP) – Toyota’s second quarter profit more than quadrupled despite lingering worries about the safety of its cars after massive recalls that are still dogging its sales in the US.

Toyota reported July-September profit of ¥98.7 billion ($1.2 billion) on Friday, up dramatically from ¥21.8 billion profit a year earlier but lower than analysts expected. Quarterly sales rose 5.8 percent to ¥4.807 trillion ($59.5 billion).

Toyota Motor Corp. is the only major automaker whose US sales have been sluggish despite a recent onslaught of incentives that have boosted other automakers’ results — underlining how its once sterling image continues to be tarnished in that crucial market.

Like other Japanese exporters, Toyota is also fighting damage from a strong yen that erodes the value of overseas earnings.

The world’s top automaker by vehicle sales raised its profit forecast for the year through March 2011, albeit modestly, to ¥350 billion ($4.3 billion) from an earlier forecast for ¥340 billion ($4.2 billion) profit.

That would mark a 67 percent rebound from the previous year, when the maker of the Prius hybrid and the Camry sedan was hit hard by the recall woes. But that’s a shadow of what it used to rake in during its heyday.

Toyota raised its global vehicle sales forecast for the full year to 7.41 million vehicles from 7.38 million. That would be a 2.4 percent gain from 7.24 million vehicles sold the previous year.

Toyota said it was more upbeat about sales in Japan, the rest of Asia and Europe, but lowered its forecast for North American sales by 80,000 vehicles.

“We continue to suffer a strong backlash from the repercussions,” said executive vice president Satoshi Ozawa of the quality problems. “The situation may be tough for us, but we will try to sell one car at a time.”

Over the past year, Toyota has recalled more than 11 million vehicles around the world for a range of problems, including faulty gas pedals, floor mats that can trap accelerators, defective braking and stalling engines.

Just Thursday, Toyota recalled 135,000 compact cars in Japan and Europe for a software problem that could cause power steering to stop working.

Koji Endo, an auto analyst with Advanced Research Japan Co., thinks more time is needed before Toyota can patch up its image because “the Toyota Way,” reputed for quality and long the foundation of the automaker’s growth, has been debunked.

“We can’t see any overall vision or a model for its business that points the direction in a big way about where Toyota is going,” he said. “We are not going to see a powerful Toyota for a long time yet.”

Toyota’s results follow even stronger earnings recoveries from other Japanese automakers including Honda Motor Co. and Nissan Motor Co.