Moody’s Investors Service warned yesterday it might downgrade its credit rating for Toyota Motor Corp because of the financial fallout from suspended car production following the March 11 earthquake and tsunami in Japan.
The ratings agency said Toyota’s financial and operating performance would worsen as a result of the disasters, which are causing major disruptions in auto parts supply and have forced Toyota and other automakers to halt production.
Toyota, the world’s No. 1 carmaker, suspended production at all 18 of its factories in Japan from March 14 to 26 because of parts shortages. Since March 28, Toyota has been running just two plants at limited capacity to make Prius and Lexus cars.
The disasters resulted in a production loss of 200,000 cars from March 14 to April 1, Toyota spokeswoman Shiori Hashimoto said. She declined to comment on Moody’s warning.
Mamoru Kato, an analyst at Tokai-Tokyo Securities, said Toyota’s production at the two plants accounts for 3 to 4 percent of the its normal capacity.
“There is no question that a plunge in domestic production will really hurt Toyota’s earnings,” Kato said. “We don’t know how long the shortage crisis will last.”
Toyota has not said when its domestic factories can return to full operations. Moody’s said it would take “many months” for Toyota to return to normal production. Toyota’s long-term uncollateralized debt rating is currently set at “Aa2” by Moody’s. The ratings agency said its review for possible -downgrade would focus on Toyota’s ability to restore production in Japan.
“Moody’s will also consider how quickly the company can improve its profitability despite the negative impact of the disasters,” it said.
Japan’s top business daily Nikkei Shimbun said yesterday that Toyota would resume auto production at most of its domestic plants as early as next week. The Asahi Shimbun said Toyota would reopen the remaining plants under limited capacity. Hashimoto denied the reports.
Car sales in Japan dived nearly 40 percent last month following the tsunami.
Toyota said on Monday it was inevitable that it would be forced to suspend production at all of its North American factories because of parts shortages following the quake.
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