Toyota Cuts Production, SMFG to Raise $4B

Darlington Musarurwa
19 Nov, 2008
New York City

Toyota will halt production during holiday period in the U.S. and slow production at several plants in North America. Toyota also said it will miss sales target in China. Nissan predicted U.S. auto sales to plunge to 11 million in 2009. Sumitomo Mitsui to raise $4 billion.

[R]5:00AM New York, 7:00PM Tokyo - Sumitomo Mitsui to raise 400 billion yen in preferred securities.[/R]

Stocks in Japan fell marginally on market jitters as Sumitomo Mitsui announced that it will raise funds to boost capital.

Commodity stocks extended losses as metal prices continue to slide on expectations of a deeper and protracted recession.

In Tokyo trading Nikkei 225 fell 0.6% or 55.19 to 8,273.22, and the broader Topix Index dropped 1% or 8.01 to 827.43.

In the first section of the Tokyo Stock Exchange 19.4 billion shares worth 1.5 trillion yen were traded and in the second section 255 million shares valued at 2 billion yen changed hands.

Of the Nikkei 225 index stocks 82 rose, 136 declined, and 7 were unchanged. Shionogi & Co. led advancers in the index shares with a rise of 6.5% followed by Meidensha soaring 5.7%.

Sumitomo Mitsui to Raise Y400 billion

Yomiuri Newspaper reported today that Sumitomo Mitsui Financial Group will raise 400 billion yen in preferred securities and issue funds to finance the redemption of outstanding preferred securities.

The securities will not be convertible to common stock. SMFG intends to boost its capital base that has been plagued by bad loans.

Last week, the lender announced a 51% quarterly drop in profit.

Toyota to Cut Production

Toyota Motor Co. reported today that it will halt production at its North American plants on December 22 and 23 and will also break for both the Christmas and the New Year period.

Toyota’s U.S. sales are currently down by 12% in the first ten months of the year and sales in October declined more than 25% from a year ago. U.S. auto sales are likely to dip below 14 million units in the current year and drop to below 12.5 million in 2009.

The automaker will also slow the pace of production at its Kentucky plant and reduce its 500 staff by March.

In addition, the Indiana factory and California joint venture plant will lower production of the Sienna minivan and Tacoma pickup truck indefinitely from January. Production will be reduced further at its three U.S. assembly plants in 2009.

The company expects that Chinese sales will drop to 600,000 vehicles this year from the target of 700,000.

Separately, Nissan cautioned that it expected no profit in the six months period to March, adding that 2009 will be the most challenging in 50 years.

Nissan chief executive Carlos Ghosn forecasted that U.S. industry- wide sales may drop to 11 million vehicles next year from 16.15 million sales in 2007.

Gainers & Losers

Shionogi & Co. led advancers in the Nikkei 225 index shares with a rise of 6.5% followed by increases in Meidensha Corp. of 5.7%, in Softbank Corp. of 5.6%, in Sky Perfect JSAT of 5.3%, and Sumitomo Osaka of 5.2%.

Nomura Holdings led decliners in the Nikkei 225 index shares with a fall of 11.6% followed by losses in NTN Corp. of 11.1%, in Mitsubishi Corp. of 9.2%, in Marubeni Corp. of 8.8%, and Hitachi Construction Machinery of 8.2%.

Sumitomo Mitsui Financial Group fell 7.9% as a result. Mizuho Financial Group dropped 7.5% and Shinsei Bank slid 7.2% as a result.

Commodity stocks fell after crude oil prices traded below $55 a barrel and gold prices declined 1.3% to $732.70 per ounce. Mitsui & Co. shed 6.5% and Toho Zinc lost 6.9%.