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The Spaminator
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Toyota's credit outlook cut to negative by Moody's citing yen
By: Siddharth Philip
December 22, 2011
Automotive News

MUMBAI (Bloomberg) -- Toyota Motor Corp. and its affiliates' credit rating outlook was cut to negative from stable by Moody's Investors Service on concern gains in the yen may delay recovery in their profit margins.

The automaker's rating could be reduced if it is unable to implement steps to restore profitability, Moody's said in a statement today. Toyota's senior unsecured long-term rating was affirmed by Moody's at Aa3, three notches below the top investment grade.

Toyota, poised to lose its crown as the world's biggest automaker this year to General Motors Co., said today vehicle sales may rise the most in at least 12 years in 2012 as the carmaker recovers from production disruptions caused by Japan's March earthquake and Thailand's record flooding.

The gain in the yen, which is cutting Toyota's export earnings, and slowing economic growth in the U.S. and China may hamper its efforts.

"The recovery in Toyota's profitability will be more protracted than anticipated due to the company's significant exposure to the strong yen," Moody's said. "This foreign-exchange pressure is compounded by eroding macro-economic conditions in certain core markets."

Japan's currency has advanced more than 8 percent in the past six months, the best performance among 10 developed-nation peers tracked by Bloomberg Correlation-Weighted Indexes.

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