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Toyota profits soar despite recalls
Japanese automaker says recall crisis is not over, but reports annual profits of $2.2bn.
Last Modified: 11 May 2010 10:53 GMT
Toyota's massive recall over safety concerns cost the company nearly $2bn [EPA]

Toyota, the world's largest automaker, has posted an annual profit of more than $2bn despite a recent global recall of more than 8 million of its vehicles over safety concerns.

The Japanese manufacturer said on Tuesday that its net income for the financial year ending on March 31 had jumped to 209.4 billion yen, or $2.2bn, from a loss of 437 billion yen the previous year.

It said it expects that figure to rise even higher by the end of the current fiscal year, projecting profits to reach $3.3bn by March 2011.

The company attributed the profit to efforts to slash costs and increase aggressive sales incentives, as well as a recovery in the global auto market.

"I feel that I am now at last standing at the starting point with the latest earnings," Akio Toyoda, Toyota's president, said on Tuesday.

"This year will mark a new beginning for Toyota."

'Far from recovery'

Despite the increase in profits, Toyoda also warned that the company is still far from fully recovered following the worldwide recall, which cost the company nearly $2bn.

"We are still in the storm and that situation has not yet changed," he said.

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"But, we have begun to see the light at the far end of the storm."

Toyota announced it would recall 2.3 million vehicles in January to address sticking pedals on popular vehicles such as the Camry and Corolla.

The company has recalled more than eight million vehicles worldwide because of acceleration problems in multiple models and braking issues in its Prius hybrid. It is facing more than 90 lawsuits over the defects.

Seijiro Takeshita, a director at Mizuho International, the securities and investment banking arm of one of Japan's largest banking groups, said that although the latest results showed consumers had stuck with Toyota, the company still had its work cut out.

"It's pretty clear the consumers' confidence has come back quite strongly," he told Al Jazeera.

"[The company is] up to stressing their strategy of increasing their sales in emerging nations, particularly in Asia, like China and also stressing the sales of new types of vehicles.

"It's very difficult to determine [if] a later slump [could] take place. However, if anybody was going to call back itself in quality means, it would be Toyota - they are very obsessive about quality."

Legal action

Toyota faces class-action lawsuits in the US over several safety issues in some of its models.

US authorities have said they may impose more fines on the company if necessary after it agreed to pay a record $16.4m in April to settle claims that it hid defects.

The company came under new scrutiny on Monday when the US highway safety agency launched an investigation into whether it appropriately notified the agency of a steering defect in its Hilux trucks.

Ray LaHood, the US transport secretary, said the government wants to see results from Toyota's safety measures, and he refused to rule out the possibility of further fines.

"We will watch very carefully for improvements in safety," he said.

"Results in safety will be the proof that these steps that have been taken will prove successful."

Source:
Al Jazeera and agencies
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