Toyota is still struggling to return its Japanese car plants to full operation almost four weeks after the March 11 disasters as it faces a credit rating cut because of the damage to its already strained financial state.
Media reports yesterday morning in Tokyo said Toyota would resume production next week.
But a company spokesman later cast doubt on that, telling JiJi Press the group had no plans to resume operations next week at most of its Japanese vehicle assembly plants and had yet to decide plant operation schedules for the following week as well.
Honda is due to restart operations at its Japanese plants on Monday, but other plants around the world might be slower in resuming production.
Confusion about the restart came as ratings group Moody’s said yesterday that it is now reviewing some of its debt ratings on Toyota Motor Corp. and some subsidiaries for possible downgrade.
Moody’s said the review was based on its view that the car maker’s financial and operating performance will worsen in the aftermath of March 11 Japanese disasters and the resulting supply chain disruptions.
Moody’s said its reviewing Toyota’s Aa2 long-term senior unsecured and issuer ratings. Toyota’s Prime-1 short-term rating is not affected by the move.
“Toyota’s financial performance was already weak relative to expectations for the Aa2 rating level, which had been reflected in the negative outlook,” Moody’s said in a statement.
Although Toyota’s factories didn’t suffer any significant damage from the March 11 earthquake and tsunami, the disasters “apparently disrupted the shipping of approximately 500 components,” and “normal production cannot be expected for many months”, Moody’s said.
Moody’s said it was also reviewing the ratings on Toyota Financial Services Corp., Toyota Finance Australia Ltd., Toyota Credit Canada Inc., Toyota Motor Finance (Netherlands) B.V., Toyota Finance Corp., Toyota Finance New Zealand Ltd. and Toyota Financial Services (S. Africa).
Moody’s added that Toyota’s operating margins are thin in comparison to those of its peers, and its dependence on Japan’s domestic market is still relatively high, around 27%.
“Expected weak consumer sentiment may have a negative impact on domestic demand that ensuing replacement demand may not be able to offset,” Moody’s said.
The good news was in Moody’s view that, because Toyota still has a strong business franchise and excellent balance sheet, the likelihood of a multiple-notch downgrade was very limited.
The business paper Nikkei said Toyota will have lost 300,000 cars in the production halt by the end of this week.
The Nikkei also reported yesterday that four larger European reinsurers will pay more than 300 billion yen ($A3.50 billion) to Japanese general insurers for last month’s Japanese disaster.
German reinsurer Munich Re has by far the biggest liability, at about ¥180 billion, followed by Swiss Re at around 100 billion yen, which is roughly in line with the company’s projection last month, Hannover Re, at around ¥30 billion, and France’s Scor SE at about ¥22 billion.
Total cost for all insurers, domestic and international, is put at a maximum of $US35 billion.
AIG has already revealed it will take a $US700 million first quarter charge. It is the largest foreign general insurer operating in Japan.
And yesterday we had a company update that clearly shows the dramatic impact on business from the quake, tsunami and continuing crisis at the Fukushima nuclear plant (which had some good news yesterday with the leak of irradiated water apparently halted).
East Japan Railway Co which operates in the devastated northeast area (and around Tokyo as well as Narita Airport and Bullet train services to the north from the capital) says that revenue from its train services in March fell 26.8% year on year, the largest monthly drop ever, due to the March 11 earthquake and tsunami in northeastern Japan.
The preliminary figure far exceeded the previous record fall of 11.5% in April 1997 when the country’s consumption tax rate was raised to 5% from 3%.
JR East said that from March 11 to March 31, its railway business revenue plummeted 39.1%.
And Japanese retailer Nitro Holdings said the March 11 disasters would help produce the group’s first profit fall in 25 years.
The major discount furniture retailer now expects a 10.3% fall in operating profits from the year before for the 2011-2012 financial year (which ends February 28, 2012).
