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Toyota revs up profit forecast

From Bloomberg News

Toyota Motor Corp. predicted Tuesday that it would earn more than any other Japanese company this fiscal year after overseas sales jumped, boosted by a weaker yen.

The automaker also bought a stake in smaller Japanese rival Isuzu Motors Ltd. to gain access to diesel engine technology as it works to expand its reach in Europe.

Toyota, the world’s second-largest automaker, said net income would rise 13% to 1.55 trillion yen ($13 billion) in the year ending March 31. Profit in its second quarter ended Sept. 30 jumped 34% to a record 405.7 billion yen ($3.4 billion).

The company, which captured 15.2% of the U.S. market for new cars and trucks through October, is poised to pass General Motors Corp. as the world’s biggest seller of autos in the next few years.

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President Katsuaki Watanabe is setting his sights on Europe, where the company’s progress has been slower. Purchasing the Isuzu stake gives Toyota a range of small diesel engines, the type that power half of all cars sold in Europe.

“Toyota keeps expanding and racking up profits,” said Yoshihiro Okumura, a general manager at Chiba-gin Asset Management Co., which manages the equivalent of $365 million. “The gap between Toyota and its rivals keeps growing.”

Rising profit at Toyota contrasts with Ford Motor Co.'s $5.8-billion loss in the quarter ended Sept. 30, the U.S. company’s biggest in 14 years. GM, which once owned 49% of Isuzu, posted a $91-million loss on costs from closing plants and cutting jobs.

Net income at Toyota’s domestic rival Honda Motor Co. fell 4.3% because of losses on derivatives. Earnings at Nissan Motor Co. rose 31% as it sold a stake in an affiliated truck maker.

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Toyota, including sales at its Hino Motors Ltd. and Daihatsu Motor Co. units, sold 6.61 million vehicles worldwide in the first nine months of the calendar year, according to data compiled by Bloomberg. That compares with 6.89 million for GM. Toyota plans to sell 8.47 million autos this fiscal year, moving closer to ending GM’s 80-year reign as the world’s biggest automaker.

Toyota said it would pay 44 billion yen ($374 million) for 100 million Isuzu shares from Japanese trading companies Mitsubishi Corp. and Itochu Corp., giving it a 5.9% stake.

“Europe is a big market for diesels,” Watanabe said in Tokyo. “We think diesels can be applied to vehicles, including hybrids.”

The automaker said its consolidated auto sales would reach 9.8 million in 2008, aided by the redesigned Camry sedan and a new Corolla small car, its top-selling models this year.

“Toyota really wants to become the world’s biggest automaker,” said Andreas Moerke, chief economist at Interlogue JEB Ltd. in Tokyo. “The growth rate is very impressive.”

The automaker increased its forecast for full-year operating income to 2.2 trillion yen from 1.9 trillion yen. Sales will grow to 23.2 trillion yen from 22.3 trillion yen, the company said.

Toyota is spending a record 1.55 trillion yen to develop new models and build factories during the 12 months that end in March. The automaker may open an eighth assembly plant in North America to meet increasing demand, and Toyota also plans to increase capacity in Russia, Thailand and China. To support the expansion, Toyota is hiring 8,000 engineers globally by 2010.


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