Toyota Interrupted (TM,GM,F,DCX))

Includes: DDAIF, F, GM, TM
by: Douglas McIntyre

Toyota (NYSE:TM) announced its twelve month results today, and it was hard to say whether U.S. car companies should cheer or cry. Revenue for the year ending March 31, 2006 rose 13.4% to 21.03 trillion yen. Operating income rose 12.3% to 1.87 trillion yen. For the fiscal year, total vehicle sales were 7.794 million.

The company said its business is Japan was basically flat at 2.364 million units. Sales in North America increased by over 10% to 2.556 million. Sales in Europe and all other regions moved up modestly.

The fly in the ointment was the company's forecast for the next fiscal year. Management's expectation have turned very modest with guidance for revenue of 22.3 trillion yen and operating income of 1.9 trillion yen. Total vehicle sales are forecast at 8.45 million. Several media outlets blamed part of this on the company's forecast for the dollar/yen exchange rate.

That means the topline growth is slowing to 6% and operating income growth to under 2%. But, unit sales will be up over 8%.

What's wrong with the picture? Toyota is slowing down. Margins must also be under pressure along with revenue yield-per-vehicle.

If Toyota's problems are their's alone, it may be that GM (NYSE:GM), Ford (NYSE:F), and Chrylser (NYSE:DCX) have something to spark a bit of much needed optimism. All three companies watched their shares rise today, as Toyota traded flat near its 52-week high. Over the year, the stock has gone from $70.95 to $121.85 today, just short of the period high of $124.

But, the news could also be a mirage for the Big Three. It may be that the anticipated slowdown at Toyota represents the company's view of the global market and the dropping tide could bring all ships down.

No one in Detroit should open the champagne yet.

TM 1-yr chart:

Douglas A. McIntyre is the former Editor-in-Chief and Publisher of Financial World Magazine. He was also the president of when it was the 10th most visited site on the internet, according to MediaMetrix. He can be reached at

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Tagged: , Auto Manufacturers - Major
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