Press Release: Toyota Credit Canada Inc. & Toyota Motor Corporation

Press Release: Toyota Credit Canada Inc. & Toyota Motor Corporation
Date of Release: Sep 20, 2002
Confirms at AAA & R-1 (high)

Kam Hon, Walter Schroeder /  416-593-5577 ext.2243 / e-mail:
khon@dbrs.com

 

Shawna Wagnell	
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Dominion Bond Rating Service Limited	
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The above ratings of the Toyota Group of companies are confirmed as
above, all with a Stable trend.  The confirmation recognizes that the
balance sheet of the auto company continues to be debt free, net of cash
and marketable securities, and all financial ratios are overwhelmingly
strong.  

 

Toyota Motor Corporation ("Toyota" or "the Company") borrows mainly
through its captive finance company.  Stress tests show that even with
Yen 100 billion- Yen 200 billion continuing drops in operating cash
flow, maintenance of current dividend, and capex at near record Yen
1,000 billion levels, the Company can still finance most of the cash
needs internally, and remain debt free.  This gives Toyota substantial
flexibility, and unless major share repurchases are initiated or a
takeover is made (this would be unusual for Toyota), the auto company
should remain debt free.  However, the Company still faces two key
challenges:  (1) The Company is highly sensitive to the foreign value of
the yen.  Each Yen 1 change in Yen /$ exchange rate results in a Yen 20
billion variance in operating income.  (In 2001-2002, the devaluation of
the yen helped income by Yen 410 billion.)  (2) The weak Japanese
economy has resulted in annual sales decreases of one million units from
the mid 1990s to a level near four million.  This weak growth in
Toyota's number one market has hurt profitability.

 

 

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