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Business

Toyota lifts annual outlook on weak yen

Japanese auto giant Toyota has revised up its full-year forecast but warned of an uncertain outlook with the car industry bracing for possible protectionist policies under US President Donald Trump.

After losing its crown as the world's biggest carmaker to Germany's Volkswagen in 2016, Toyota unveiled a 24-percent plunge in its nine-month net profit to December 2016, saying it had fallen to 1.43 trillion yen ($12.7 billion, 11.8 billion euros) - the first April-December decline in five years.

For its full fiscal year ending March 2017, however, Toyota forecast a rise in net profit to 1.7 trillion yen as a drop in the value of the Japanese currency had allowed it to lift its earnings outlook. Still, Toyota's latest forecast is far below the record 2.31 trillion yen net profit in the previous fiscal year to March 2016.

In a statement it said the upward revision was "based on the current trend of financial results, due to changes in foreign currency exchange rates and the upward revision of our sales plans."

Japanese exporters have enjoyed a boost since Trump's November election as the yen has weakened on expectations his big-spending, tax-cutting agenda would fire inflation and force the Federal Reserve to hike interest rates.

Toyota's vehicle sales in April-December ticked up to 7.7 million units, from 7.6 million, with increases in Japan, Europe and Asia. But vehicle sales fell in the Middle East and Africa, while the key North American market remained flat after cheap oil hit demand for Toyota's fuel-efficient offerings including the Prius.

Trump trade uncertainty

The Japanese auto industry faces uncertainty over Trump's drive to support US firms over foreign imports, a stance that has raised fears of a possible global trade war.

The new US president has targeted Toyota with strong criticism of its ongoing project to build a new factory in Mexico, threatening it with painful tariffs.

"It is difficult to forecast the impact of the Trump administration at this time," Toyota executive Tetsuya Otake told reporters.

Shigeru Matsumura, an analyst at SMBC Friend Research Center, said Toyota was facing "political risks" over Trump, despite a recent decision by the carmaker to invest $600 million and create 400 jobs at one of its US plants.

"Toyota and other Japanese carmakers have tough steering to do on their strategies in North America," he said.

Also on Monday, Toyota announced it had agreed with carmaker Suzuki to begin detailed discussions on a technology tie-up as well as mutual supply of products and components.

"What the companies have agreed on is to create a partnership which will be win-win for both parties, not one in which Toyota would rescue Suzuki," said Suzuki chief executive Yasuhito Harayama.

Stiff competition at home and abroad has pushed some Japan's automakers to eye tie-ups. Nissan last year bought a one-third stake in Mitsubishi Motors, forging an alliance that will challenge some of the world's biggest auto groups.

uhe/sri (AFP, Reuters, dpa)