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Toyota Australia posts $108 million loss

Taxing times: Falling exports from Toyota Australia's Altona plant compounded the company's financial woes.

Slow sales and massive $290m tax bill plunge Toyota Australia into $108m red hole

6 Jul 2010

TOYOTA Australia has posted a disastrous operating loss of $107.9 million for its 2009-2010 financial year ending March 31, after a huge $290.2 million tax bill that comprised an "under provision" $246.7 million payment, including an unspecified one-off tax settlement with the Australian Tax Office for previous years.

Contrasting sharply with its $182.3 million before-tax profit, the sizeable after-tax loss for Australia’s top-selling vehicle brand and largest car-maker follows a profit of $123.3 million during 2008-2009 – and the record $242.2 million profit Toyota Australia posted in its previous (2007/08) fiscal year.

It compares with an even larger 2009 calendar year loss of $210.6 million for GM Holden, which posted its worst financial result in history following the collapse of exports to the US and Middle East last year, while Ford Australia posted its first positive result since 2005 last calendar year with a slim $13 million profit for 2009.

In Toyota’s case, relatively strong domestic sales of 214,465 vehicles were let down by a 28 per cent slide in exports, which still led the Australian industry at 68,652 vehicles, generating $1.2 billion in revenue.

Including exports, sales revenue for the period was down from $8.8 billion in 2009 to $8.6 billion, but contributing to the result was an under provision payment of $246.7 million for prior years following negotiations with the ATO.

“Included within that number is an adjustment with the Australian Tax Office after an intensive period of review and discussion between Toyota Australia and tax authorities,” said Toyota Australia spokesman Glenn Campbell.

Mr Campbell refused to comment on specific details of the tax bill.

“Like any taxpayer, details of our relationship with the ATO remain confidential,” he said. “The setting of intercompany prices for products is a complex issue for all large corporations and we have worked co-operatively with tax authorities to resolve the matter.

“Toyota Australia will continue to work with the ATO to ensure we have tax clarity and certainty for all parties.”

 center imageLeft: Toyota Australia president and CEO Max Yasuda.

Announcing the disappointing news yesterday, Toyota Australia president and CEO Max Yasuda described the past 12 months as a challenging time for Toyota.

He blamed his company’s loss on Toyota’s unprecedented global safety recall debacle, unfavourable exchange rates, raw material price increases and more intense competition from global importers, but reiterated the world’s largest car-maker’s renewed commitment to quality.

“Fluctuations in currency, price increases in raw materials, increased global competition from global car importers and global recall activity in late 2009 made local conditions difficult,” said Mr Yasuda.

“Toyota Australia responded quickly to the Prius recall involving 2378 cars in the Australian market. Our dealers personally contacted customers and completed the software upgrade to 90 percent of vehicles within three weeks.

“Having participated in this recall activity, we have responded by undertaking new activities to ensure high quality standards are achieved. This includes further developing our capability for early detection of quality issues and rectification.

"Toyota Motor Corporation has formed a Special Committee for Global Quality and Toyota Australia's manufacturing plant at Altona plays a role in this activity. We will continue to challenge ourselves to ensure we deliver the highest-quality cars to our customers.”

Mr Campbell said the federal government’s 50 per cent small business tax allowance buoyed sales over the past 12 months, but weak sales due to the global financial crisis heavily impacted sales in the first half of last year.

“The reality is that Toyota sales significantly deteriorated in the first half and were much lower than we hoped. We were still profitable but market conditions continued to be impact by the global financial crisis,” he said.

“However, we were able to maintain strength of demand for Toyota vehicles in the second half of the year, posting a net profit with improved economic conditions and the positive impact of the federal government stimulus schemes.”

Mr Campbell also said this was combined with company-wide cost-saving initiatives, such as “intensifying our supplier development programs” and using the economic downturn as an opportunity to run training days for plant workers.

Mr Yasuda said Toyota expected the Australian new-vehicle market to improve in 2010, but in contrast with other brands and the Federal Chamber of Automotive Industries, which this week raises its 2010 sales forecast from 940,000 to 980,000, Toyota Australia expects a total industry of just 920,000 this year.

“The global financial crisis affected demand for Toyota vehicles, but by mid year improved market conditions, boosted by the federal government's investment allowance, helped Toyota Australia achieve 214,465 domestic vehicle sales for the financial year,” he said.

“For the calendar year, Toyota was the best selling brand, achieving 200,991 vehicle sales, representing a market share of 21.4 per cent. We expect market conditions to continue to improve through the rest of 2010, making our industry goal of 920,000 domestic sales achievable.”

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