Moody's reviews Toyota, units for downgrade on Japanese quake impact

RTTNews - Moody's Japan K.K. has placed its Aa2 long-term senior unsecured and issuer ratings on Toyota Motor Corp. and its subsidiaries under review for possible downgrade.

However, the rating agency said that the company's Prime-1 short-term rating is affirmed and not affected by this rating action.

Moody's review for possible downgrade reflects its view that Toyota's financial and operating performance will worsen after the March 11 earthquake and tsunami in Japan and the resulting supply chain disruptions. The rating agency added that Toyota's financial performance was already weak relative to expectations for the Aa2 rating level, which had reflected in a negative outlook.

The disaster in Japan has disrupted shipping of about 500 components of Toyota. Further, the company's suppliers are likely to suffer due to the potential power shortages during the coming high-demand summer season, especially when Toyota's dependence on the Japanese market is still high.

Moody's said it is still concerned that an expected improvement in profitability may be hampered or delayed by not just the negative impact of the earthquake, but also other challenges Toyota faces. Meanwhile, Toyota Motor Sales, U.S.A., Inc., announced the one-millionth sale of the Toyota Prius, the world's first mass-produced hybrid gas-electric vehicle, in the U.S.

The company stated that since it was introduced in the U.S. in 2000, Prius, when compared to the average car, has saved American consumers more than an estimated 881 million gallons of gas, $2.19 billion in fuel costs, and 12.4 million tons of CO2 emissions.

Bob Carter, Toyota Division group vice president and general manager said, "Prius has become synonymous with the word hybrid and as we see fuel prices starting to rise again, it has accounted for more than 60 percent of hybrid passenger car sales so far this year."