Toyota Forecast A Decrease in Annual Profit

January 21, 2012

Unlocking Word Meanings
Read the following words/expressions found in today’s article.

1. forecast (v.) [fawr-kast, -kahst, fohr-] – to guess or predict what will happen in the future
Example: Technology helps people forecast daily weather.

2.  surge (v.) [surj] – to rise
Example: Temperatures surge during summer.

3. disrupt (v.) [dis-ruhpt] – to  stop the normal movement or activity of something
Example: The fire alarm disrupted the team’s meeting.

4. subsequent (adj.) [suhb-si-kwuhnt] – following after another
Example: The subsequent landslides that occurred after the typhoon caused more damage to property.

5. shove (v.) [shuhv] – to push or forcefully move (something) aside
Example: We shoved our way through the crowded concert venue.

Read the text below.

Before 2011 ended, Toyota Motor Corporation forecasted a 54% decrease in its annual profit due to natural disasters and the surging value of the Japanese yen.

The floods that struck Thailand in November disrupted Toyota's production as the company was still recovering from Japan’s earthquake and tsunami disasters in March. In its report, Toyota estimated a loss of 260,000 vehicles, or 3.4% of its yearly production target because of the said floods.

Masatoshi Nishimoto from the research firm IHS Automotive said that Toyota lost the most output from the disaster compared to other Japanese carmakers. He added that recovery will be tough for Toyota since it ordered 90% of vehicle parts for its newer models from Thailand, and finding other suppliers for those parts would be hard.

Toyota also forecasted that the surging value of the yen would lessen the company’s operating income. According to Toyota's chief financial officer Satoshi Ozawa, Toyota already had to raise the prices of some car units, which would likely decrease company sales.

As Japanese carmakers including Nissan and Honda still struggle to recover from the subsequent natural disasters, carmakers from other countries are prepared to take advantage of the situation. Analysts estimated that South Korea's Hyundai would earn twice Toyota’s profit for 2011, while the US’ General Motors could soon shove Toyota from its position as the world's biggest carmaker.

However, Toyota's US sales rose in November, and could be proof that Toyota has the chance to recover. To make up for the losses, Ozawa said that the company will hire workers from Japan in early 2012 to further increase production.

Viewpoint Discussion
Enjoy a discussion with your tutor. 

Discussion A

      What do you think companies should do to lessen the damage to profits when they get affected by natural disasters?
      Do you think the rest of a country’s economy is also affected when big companies lose so much profit? Please explain your answer.

Discussion B

      What do you think is the advantage of forecasting a company’s profits?
      Do you believe Toyota can still recover from its losses? Why or why not?


January 21, 2012