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Toyota, Mazda Lead Declines by Japanese Carmakers on Weaker Euro, Dollar

Toyota Motor Corp. and Mazda Motor Corp. fell the most in more than two months, leading declines by carmakers in Tokyo after the yen gained against most major currencies, reducing the value of their overseas earnings.

Toyota, the nation’s biggest automaker, dropped as much as 3 percent, the most since Feb. 15, to 3,585 yen and was down 1.9 percent at 3,625 yen as of the 11 a.m. trading break. Mazda Motor Corp. fell 2.8 percent.

Concern that debt problems will spread after Standard & Poor’s lowered Greece’s debt to junk and cut Portugal’s rating caused the yen to rally against the dollar and euro, as the crisis curbed demand for riskier, higher-yielding assets. Toyota’s operating profit is reduced by 35 billion yen ($376 million) for each 1-yen strengthening of Japan’s currency against the dollar, the company said in February.

“This is almost a Pavlovian market response to sell carmakers with large exposures to Europe, especially Mazda,” said Mitsuo Shimizu, an analyst at Cosmo Securities Co. in Tokyo.

The euro was at $1.3178 as of 9:32 a.m. in Tokyo, after earlier dropping to $1.3145, the weakest since April 29, 2009. Sales in Europe made up 21 percent of Hiroshima, Japan-based Mazda’s revenue in the quarter ended March 31.

Mazda exports about 80 percent of domestic production and aims to increase the ratio to 85 percent by fiscal year 2016, President Takashi Yamanouchi said yesterday in Tokyo.

Toyota vs. Euro

Toyota estimates a 1-yen rise against the euro cuts its operating profit by 5 billion yen, the Toyota City, Japan-based carmaker said in February. The company earned 11 percent of revenue in Europe in the quarter ended Dec. 31.

The yen gained to as much as 93 versus the dollar in Tokyo trading today, from 93.26 at the close in New York yesterday. Japan’s currency reached a seven-month low of 94.79 on April 5.

Honda Motor Co., Japan’s second-largest carmaker, fell 1.8 percent to 3,275 yen. The Tokyo-based company estimates operating profit is reduced by 12 billion yen for every 1-yen strengthening against the dollar and 1.5 billion yen for a corresponding gain against the euro.

Paul Nolasco, a Tokyo-based spokesman for Toyota, and Akemi Ando, a spokeswoman for Honda, declined to comment.

Honda will report earnings for the fiscal year ended March 31 at 3 p.m. today. Toyota will report its results on May 11.

To contact the reporter on this story: Makiko Kitamura in Tokyo at mkitamura1@bloomberg.net

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