Toyota, the world's biggest automaker, recorded its first annual net loss in six decades Friday and warned that it would plunge even deeper into the red this year, a stunning reversal for an automaker whose breakneck expansion and record profits seemed unstoppable just 12 months ago.
The automaker said it lost $7.7 billion in the first three months of the year — even more than the $5.9 billion lost by its U.S. rival, General Motors, in the same period.
The devastating numbers from the final quarter of the fiscal year contributed to a worse-than-expected net loss of $4.4 billion for the year that ended in March. It was Toyota's first annual net loss since 1950.
The automaker warned it would lose another $5.5 billion this fiscal year. It cut its annual dividend by nearly 30 percent, its first cut to the dividend in at least 15 years.
Toyota attributed its woes to the slump in global demand and a strong yen, which makes exports from Japan more expensive.
"It will take more time before the financial markets in the U.S. and Europe normalize and the global economy recovers," Toyota's president, Katsuki Watanabe, said Friday. "We were lacking in scope and speed in dealing with various problems, and for that I am sorry."
The loss caps a roller-coaster year for Toyota, which in 2008 dethroned GM in terms of vehicles sold worldwide, a post the Detroit-based automaker had held for 77 years. Throughout much of last year, Toyota's sales were booming, thanks to the popularity of its Camry sedan, Lexus luxury line and Prius hybrids.
But Toyota's business has been hit hard by the U.S. financial crisis and credit crunch, which has dragged down growth and consumer spending worldwide.
To cope, Toyota has cut back on production, but it hasn't closed factories. It has slashed managerial pay and offered buyouts to thousands of U.S. workers. In Japan, it reduced the number of temporary workers from 9,200 last year to 3,000.
The company has great hopes for the remodeled, third-generation Prius hybrid to be unveiled this month. But it will likely be embroiled in intense competition with Japanese rival Honda Motor Co., which has already come out with a cheaper hybrid, the Insight.
Analysts say Toyota has strong cash reserves and is far from the bankruptcy that has hit Chrysler and that threatens General Motors. Still, Standard & Poor's, the ratings agency, lowered its long-term credit rating on Toyota a notch to AA, the third-highest rating, on Friday and gave a negative outlook for the company.
Robert Wiseman, a professor of business at Michigan State University in East Lansing, said Toyota should emerge in good shape in the long run, and can even hope to benefit from a decrease in price competition in the United States as rivals weaken.