By Nobuhiro Kubo and Kiyoshi Takenaka
TOKYO (Reuters) - Fear that Toyota Motor Corp's <7203.T> profit will tumble drove its shares to their biggest one-day fall in two decades on Wednesday as the deepening financial crisis spreads through the global economy.
The world's largest automaker is considering what would be a rare downward revision of its earnings outlook because of sluggish global demand and a firmer yen, a company source said on Wednesday, as the firm's shares slid 11.6 percent.
The Nikkei business daily said Toyota was likely to post a 40 percent slide in annual profit, rather than the 30 percent fall it had forecast, missing consensus estimates.
Even before the Nikkei report, investors had worried over Toyota's future earnings amid the threat of global recession.
"It's still a surprise, nonetheless," Mizuho Asset Management fund manager Yoshihisa Okamoto said.
"Toyota is such a symbol of Japan's manufacturing sector, and the fact that the company is likely to post an earnings decline of this scale has got to have a severe impact on investor sentiment."
Shares in Toyota, which recently lost its spot as the world's most valuable automaker to Volkswagen
Both the Nikkei and Toyota suffered their sharpest percentage fall since the 1987 stock market crash.
The Nikkei said Toyota's operating profit was likely to be around 1.3 trillion yen ($12.8 billion), below its current forecast of 1.6 trillion yen and a Reuters Estimates projection of 1.63 trillion yen from 20 analysts.
But the company source, who declined to be identified as the information has not yet been made public, said Toyota was still discussing whether to change its outlook.
CAR MAKERS CRUMBLE
Shares in other automakers followed Toyota's slide. Nissan Motor Co Ltd <7201.T> fell 9.9 percent to 501 yen and Honda Motor Co Ltd <7267.T> slid 10.3 percent to 2,305 yen.
Economic gloom and a stronger yen, which serves as a safe haven in times of market turmoil, are clouding the outlook for exporters like Toyota. The yen hit a six-month high against the dollar.
On Tuesday, Nikko Citigroup cut its rating on Toyota's stock to "sell" from "buy" and lowered its target price to 3,520 yen from 6,340 yen, citing the stronger yen and declining sales.
"The financial crisis in the U.S. and Europe is leading the yen to strengthen rapidly and auto demand to drop sharply," Nikko Citigroup analyst Noriyuki Matsushima said in a note to clients.
"Toyota, the world's leading automaker, is also feeling the consequences."
Major automakers last week reported plunging U.S. sales for September, led by a 34 percent slide at Ford Motor Co
The Yomiuri newspaper reported that Toyota was set to revise down its forecasts and plans to reduce output in Europe. A Toyota spokeswoman declined to comment on the reports.
Toyota Senior Managing Director Yoichiro Ichimaru told reporters on the sideline of a company event that global sales of its Lexus luxury cars are likely to fall about 10 percent this year from 518,000 units last year, underscoring weak demand.
The Nikkei paper said Toyota may be unable to achieve its current group sales estimate of 25 trillion yen, which already represents a 5 percent decline for the year.
It may also fall short of this year's global sales target of 9.5 million units. It has already cut its 2008 and 2009 sales targets once this year as high fuel prices hammer demand for large cars and pickup trucks.
A strong yen and slumping U.S. sales pushed Toyota's operating profit 39 percent lower in the April-June period.
($1=101.55 Yen)
(Additional Reporting by Sachi Izumi; Editing by Sophie Hardach)
