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The Associated Press February 4, 2011, 12:47AM ET

Toyota fights image woes, high yen in earnings

Toyota Motor Corp., the world's No. 1 automaker, reports its fiscal third quarter results Tuesday.

WHAT TO WATCH FOR: Toyota has not fully recovered from the battering its reputation has taken because of massive recalls, which began in late 2009 and have continued through to this year.

Toyota, which makes the Camry sedan and Prius gas-electric hybrid, was the only major automaker with lower U.S. sales in December, compared with a year earlier.

The recalls have covered a wide range of problems including faulty floor mats, sticky gas pedals and braking software glitches.

Last month, Toyota announced an additional global recall for nearly 1.7 million vehicles for two separate problems that may cause fuel leaks.

The bulk of those recalls were in Japan, making for the second biggest recall in Japanese auto history, but they also included Lexus luxury models in the U.S., where Toyota's brand standing is most precarious.

There, Toyota is now associated with unintended acceleration, or runaway vehicles, including high-profile fatalities.

WHY IT MATTERS: Toyota in 2010 narrowly kept its spot as the world's top automaker in annual vehicle sales, beating General Motors Co. for the third year straight.

But as GM's rebound from bankruptcy protection and restructuring gains momentum, Toyota is failing to put the recall mess behind it. GM could easily re-emerge as the world's top automaker this year.

Like other Japanese exporters, Toyota's results are likely to be hurt by the surging yen, which erodes the value of overseas earnings. The dollar has now fallen to about 82 yen from about 89 yen a year earlier.

Toyota is forecasting a 350 billion yen ($4.27 billion) profit for the fiscal year through March 2011, up 67 percent from the previous year when results were seriously hit by recalls. It expects to sell 7.41 million vehicles around the world in the current fiscal year.

WHAT'S EXPECTED: Analysts surveyed by FactSet, on average, forecast a quarterly profit of about 84 billion yen ($1 billion) on sales of 4.6 trillion yen ($56.2 billion).

LAST YEAR'S QUARTER: Toyota's profit for the October-December quarter in 2009 totaled 153 billion yen, a reversal from red ink a year earlier. Sales rose 10 percent to 5.3 trillion yen.

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