(Bloomberg) -- Toyota Motor Corp. may see its operatingprofit reduced by about 30 billion yen ($277 million) for thecurrent quarter after a series of earthquakes struck southernJapan and disrupted parts supplies to the world’slargest automaker.

|

Production shifts stopped late last week at Toyota’s Kyushufactories and will extend to other Japan assembly lines in stagesthroughout this week, Toyota said in a statement. Japan’s mostdevastating earthquakes since March 2011 began striking thesouthern island of Kyushu on Thursday and have halted some engineand parts production for Aisin Seiki Co., chip manufacturing forRenesas Electronics Corp. and Mitsubishi Electric Corp. andmotorcycle output for Honda Motor Co.

|

Toyota’s loss of production may reach 56,000 vehicles forToyota and Lexus and 7,500 units for minicar maker Daihatsu MotorCo., Koichi Sugimoto, a Tokyo-based analyst atMitsubishi UFJ Morgan Stanley wrote in a report Monday. The 30billion-yen estimated impact to operating profit may linger intothe second quarter through September, he said.

|

Continuity plans


The earthquakes will test the business continuity plans that Toyotaand its Japanese peers drafted after natural disasters hit thenation’s east coast five years ago and disrupted operations formonths. The stakes are high for Toyota because it relies ondomestic manufacturing more than its peers. The company and itsaffiliates made more than 4 million vehicles in Japan last year,40% of their worldwide output. Nissan Motor Co. and Honda MotorCo.’s shares of auto production from Japan were 17% and 16%.

|

“Owing to the lessons learned from the Great East JapanEarthquake, the automakers and their suppliers have together builtup strong procurement networks for components that can be rapidlyrestored following disasters,” Nomura Holdings Inc. analysts wrotein a report Monday. “As such, even supposing that production atJapanese automakers is affected for several weeks, we think thatthey will quickly return to normal and be able to minimize effects”to full-year earnings.

|

Toyota fell as much as 6.8% and was down 5.1% to 5,449 yenas of 11:51 a.m. in Tokyo. The shares have declined 27% thisyear.

|

Chip plants


Aisin Seiki Co. said two plants that make engine and auto parts,semiconductors and other components have been halted since April14, when an initial magnitude 6.4-level tremblor hit Kyushuisland’s Kumamoto prefecture.

|

Renesas’s Kawashiri plant that makes chips for cars remainedshut Monday, with workers unable to check damage inside ordetermine when operations will restart, spokeswoman Atsuko Arakawasaid by phone. Mitsubishi Electric said last week it haltedproduction lines at two Kumamoto factories.

|

Related: Top 8 emerging risks for today's supplychains

|

Honda has suspended production at its motorcycle plant inKumamoto since the Thursday quake and is extending the halt toApril 22, according to spokesman Ben Nakamura. Nissan’s plants onKyushu island will resume production Monday after sustaining minordamage, spokesman Dion Corbett said.

|

Subaru maker Fuji Heavy Industries Ltd. and Mazda Motor Corp.were operating their assembly plants Monday and checking withcomponents makers about whether their supply chains would impactproduction.

|

Toyota’s domestic assembly lines are shutting down for thesecond time this year. In February, the company halted factoriesfor one week after an explosion and fire at a plant run byaffiliate Aichi Steel Corp. disrupted engine, transmission andchassis component supply.

|

Copyright 2018 Bloomberg. All rightsreserved. This material may not be published, broadcast, rewritten,or redistributed.

Want to continue reading?
Become a Free PropertyCasualty360 Digital Reader

  • All PropertyCasualty360.com news coverage, best practices, and in-depth analysis.
  • Educational webcasts, resources from industry leaders, and informative newsletters.
  • Other award-winning websites including BenefitsPRO.com and ThinkAdvisor.com.
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.