By Myra P. Saefong
Shares of major automakers in Asia traded mostly lower Monday as
the industry continued to reel from news that the world's largest
carmaker had posted its first-ever annual loss, with more losses
expected.
"It was an extremely difficult operating environment for the
automakers during the quarter (and past 12 months), and it doesn't
appear to be getting any easier," David Silver, an analyst at Wall
Street Strategies, wrote in a recent research note.
"The Japanese yen has remained stubbornly high, but the fact
remains once the economy in the United States begins to turn, other
economies around the world will follow," he said.
Toyota Motor Corp. (TM) reported Friday a $7.7 billion quarterly
loss and forecast another loss for the current fiscal year.
Toyota had already warned it would report full-year loss, which
Silver said was the first since it became a public company in
1950.
However, the warning, issued in February had called for a net
loss of 350 billion yen ($3.6 billion). The actual result was a
larger loss of 437 billion yen. A year earlier, Toyota saw a net
profit of 1.72 trillion yen.
During Monday's morning session, shares of Toyota fell by
5%.
Other automakers also headed lower, with Honda Motor Co. (HMC)
falling 3.1%, Nissan Motors shares (NSANY) down 4.4%, and Mazda
Motor Corp. (7261.TO) losing 4.1% in Tokyo.
In Seoul, shares of Hyundai Motor Co. (HYMTF) fell by 1.7%.
Nissan and Mazda are scheduled to report their financial results
on Tuesday.
Isuzu Motors (ISUZY) saw its stock climb 0.5% in Tokyo ahead of
its fiscal year results due later Monday. The company expects to
report a net loss of 15.85 billion yen.
Kia Motors Corp. (KIMTF) also managed to climb 1.8% in Seoul,
and shares of mainland China's Dongfeng Motor Group were 4.5%
higher.
The share moves came amid mixed trading in the broader Asian
markets. The Nikkei 225 Average fell 0.9% in Tokyo, and the broader
Topix fell 0.1%, but Hong Kong's Hang Seng Index was up 0.8% and
the China Shanghai Composite gained 0.9%.
Challenges abound
Toyota's losses were "primarily linked to the plunge in sales,"
said Silver.
Its rivals have, of course, been taking similar hits. Ford Motor
Co. (F) in April saw its U.S. vehicle sales drop by 32%, but it
still outsold Toyota for the first time in at least a year,
according to a note from analysts at Canaccord Adams released on
May 4.
"You know things suck when dropping 32% ranks you No. 1,"
analysts at Canaccord said in last week's note.
The Japan Automobile Importers Association reported that sales
of imported motor vehicles in Japan, including those made by
Japanese carmakers overseas, dropped for a 12th month in a row,
down 30.5% from a year earlier to 11,348 units in April, according
to a Kyodo News report on the data.
And many companies have been hurt by the strength in the
Japanese yen.
Honda, for example, cited the recently strong yen as a major
reason for the 77% drop in its fiscal year income.
In Asian trade Monday, one U.S. dollar bought 98.37 yen, down
from 98.93 yen on Friday.
But despite the sales and currency headwinds, Wall Street
Strategies' Silver is still bullish, reiterating his recommendation
to buy Toyota stock regardless of the expected loss for the current
fiscal year.
"We feel the company is best positioned to capitalize on the
eventual rebound in auto sales," he said.
And "the fact remains that despite the steep drop, General
Motors and Toyota are still No. 1 and No. 2 in the market," he
said.
He also noted weakness in Toyota's U.S. competitors.
With "bankruptcy rumors circling around General Motors, and the
[bankruptcy] filing by Chrysler, the American marketplace is wide
open for another player to try to enter," he said.
Chrysler LLC fell into bankruptcy in late April and last week
said it expects billions of dollars in losses in the coming
years.
On Thursday, U.S.-based General Motors Corp. (GM) said it lost
$6 billion as revenue was cut almost in half.