The Japanese auto giant also lowered its global vehicle sales forecast for the second time this year and said it was putting ambitious expansion plans on hold, in large part because of a precipitous drop in demand in the key U.S. market.
"The tough times are hitting us far faster, wider and deeper than expected," Toyota President Katsuaki Watanabe told a gloomy news conference at the company's Nagoya headquarters. "This is an unprecedented crisis requiring urgent action."
Toyota had reported strong growth in recent years, boosted by heavy demand for its fuel-efficient models like the Camry sedan and Prius gas-electric hybrid.
But Watanabe said a severe drop in demand, especially in the U.S., which accounts for one-third of vehicle sales, and profit erosion from a surging yen were too much for Japan's No. 1 automaker. Overall U.S. auto sales fell to their lowest level in 26 years last month.
"The change that has hit the world economy is of a critical scale that comes once in 100 years," Watanabe said.
Toyota said it expects an operating loss of 150 billion yen ($1.66 billion) for the fiscal year ending in March, compared with an operating profit of 2.27 trillion yen ($25.2 billion) a year earlier.
Toyota said it would still post a small net profit of 50 billion yen ($555 million), thanks to outside dividend income, down from year-earlier earnings of 1.7 trillion yen ($18.89 billion). But operating income is seen as the best reflection of its core business.
The outlook was a dramatic change of fortune for the iconic company, which in recent years had outlined ambitious expansion plans and weathered an industry slowdown much better than its U.S. rivals.
Toyota, which started in business as a loom maker, began making trucks and passenger cars in 1937. Its first and only operating loss came the following year, before it started reporting formal results in 1941.
At the time, Toyota was still far behind the American automakers. With World War II, Toyota started a side business making aircraft engines, but that group company switched to making auto parts and sewing machines after the war.
In its forecast, Toyota lowered the number of vehicles it expects to sell globally this calendar year to 8.96 million, down 4 percent from last year. Earlier this year, Toyota had projected worldwide sales of 9.5 million vehicles.
Initially, it had an even more aggressive target of 9.85 million, and expectations had been growing that the tally would reach 10 million in coming years — allowing Toyota to dethrone General Motors Corp. as the world's top automaker.
Tsuyoshi Mochimaru, auto analyst for Barclays Capital in Tokyo, warned worse may be ahead.
"The problem is next year," said Mochimaru. "It's unmistakable that things are extremely tough for Toyota."
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