Announcing the latest data, Toyota said that it had begun to see some results from an aggressive programme of cost-cutting.
"Although we were able to make certain improvements in fixed cost and cost reduction efforts, the decline in vehicle sales and the appreciation of the Japanese yen had a severe impact on our earnings," said Takahiko Ijichi, Toyota's Senior Managing Director.
The carmaker has slashed jobs and production in recent months, trimmed managerial pay, and cut back on other expenses in an effort to beat the downturn.
Forecast loss cut
As a result the firm said on Tuesday that it had cut back on its projected loss for the fiscal year through March 2010, saying it now expects to post a $4.7bn loss, rather than $5.8bn it had initially projected.
It also raised its global vehicle sales forecast for the fiscal year to 6.6 million vehicles, from the earlier 6.5 million, reflecting recent signs of improved sales in Japan, partly because of government measures to boost green car sales.
Toyota's new Prius gas-electric hybrid has been the top-selling model in Japan, the first time a hybrid has clinched that spot.
The Japanese government recently made hybrids tax-free and has begun to offer cash incentives for people to trade in old cars.
In the last fiscal year to the end of March, Toyota posted its worst ever loss, running up $4.4bn of red ink a year after the company registered a record profit.