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Toyota downgrades earnings forecast

Toyota has sharply downgraded its earnings forecast for this fiscal year through to March, blaming a strong yen and the recent flooding in Thailand.

Japan's biggest car maker expects to book a net profit of 180 billion yen (£1.48 billion), down from 390 billion yen (£3.21 billion) it projected in August.

It estimates leaner revenue of 18.2 trillion yen (£150 billion) from 19 trillion yen (£156 billion).

Toyota expects to sell 7.38 million vehicles worldwide this year instead of 7.6 million it predicted four months ago.

The car giant held off from releasing new earnings forecasts when it announced its first-half earnings results last month, citing uncertainties from the Thai floods that disrupted parts supplies.

It has been a rough year for Japanese car makers, who were first hit with the earthquake and tsunami in March.

They had largely rebounded from that disaster when they confronted the immense flooding in Thailand this autumn. Car production as far away as North America was scaled back as the floodwaters put suppliers out of action.

The strong yen, which hit multiple historic highs against the dollar this year, has only compounded the pain. With jitters about Europe and US economies, global investors have turned to the yen as a relative safe haven.

For exporters like Toyota, a strong yen reduces the value of overseas profits when repatriated and makes Japanese products less competitive on prices in markets outside Japan.

Toyota's new forecasts incorporate a 120 billion yen (£990 million) hit on operating profit from the Thai floods and another 190 billion yen (£1.56 billion) from the negative impact of foreign exchange rates.

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