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By Mike Caggeso
Toyota Motor Corp. (ADR:TM) may not need a government bailout, but it's hurting badly.
The world's top automaker said it will announce a revised 2009 sales forecast at its end-of-the-year news conference Dec. 22. The company is expected to slash at least 1 million cars from its original forecast of 9.7 million units, Reuters reported.
It's also expected to outline cost cutting measures that could include laying off employees, suspending plant operations, delaying the opening of new plants, and cutting the budget for research and development.
According to several Japanese media outlets, Toyota plans to eliminate bonuses for its executives and is expected to post a second-half loss.
One analyst believes the company's dividend also could be on the chopping block.
"We anticipate that even Toyota could see its post-dividend cash flow turn negative should it keep its dividends at 140 yen," Morgan Stanley (MS) analyst Noriaki Hirakata wrote in a report. "Thus, in this perfect storm, we expect the firm to cut its dividend to 100 yen per share for this business year."
That's a gigantic step backwards from last year, when Toyota took the crown from General Motors Corp. (GM) as world's largest automaker by selling 9.37 million cars worldwide.
But like all automakers – and nearly every major industry – Toyota has been crippled by a worldwide dearth in demand, brought on by a whirlwind of job losses, devalued property, lack of credit and falling stock markets.
From January to October this year, Toyota sold 7.74 million vehicles. And during its fiscal first half – six months ended September 30 – net revenues fell 6.3% compared to the same period last year.
Year-to-date, Toyota's New York-listed ADR shares have fallen about 38%, still much better than GM and Ford Motor Co.'s (F) respective stock declines of 83% and 53%. But recently, Toyota's ADR shares have been moving forward in hopes that the U.S. government will bailout Detroit's Big Three – GM, Ford and Chrysler LLC – because that would shore up the auto industry's underpinnings: Dealerships and parts and supply manufacturers.
The United States is also the largest market for most foreign automakers. Allowing one or all of the Big Three to go under would add millions to the running unemployment numbers and deepen the recession, making the U.S. market less likely to buy their cars.
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