The yen's rise against the dollar had a negative $1.8 billion impact on the automaker in the April-June quarter, the first quarter of the Japanese fiscal year. Soaring prices of raw materials also weighed on Toyota's results, effectively wiping out the effect of recent cost-cutting measures, Takahiko Ijichi, senior managing director at Toyota, said on a teleconference Friday. 'We're making further efforts at the Toyota group to accelerate our cost-reduction efforts,' he said.

While Japan's major automakers are still earning money, they have been buffeted by falling U.S. auto sales and a sweeping consumer shift out of trucks and into small cars. Like Detroit's automakers, Toyota, Nissan Motor Co. and Honda Motor Co. have seen truck sales fall and have not been able to increase small car output fast enough to meet demand.

'Currently we can't satisfy the order backlog for Yaris and Corolla,' Ijichi said. 'Because of short supplies of batteries we're not able to satisfy demand for Prius.'

The Toyota City-based automaker took a $95 million provision in its first-quarter results to pay for recently announced adjustments to its U.S. production plans. Toyota said in July that it would halt production of big trucks and SUVs in North America for three months. It also said it would build Prius gas-electric hybrid cars at a plant under construction in Mississippi that was originally slated to produce Highlander SUVs.

Toyota's revenues slipped 4.7 percent to $57 billion as rising sales in Asia failed to offset lower sales in Europe and the United States in the first quarter. Toyota's U.S. sales fell 4 percent to 729,000 vehicles during the three-month period and dropped 10 percent in Europe to 301,000 vehicles.

The company anticipates tough conditions in the United States will persist through the current fiscal year ending on March 31, 2009, but expects a recovery in the U.S. market next year, Ijichi said.

Toyota left its full-year profit forecasts unchanged. In May, it predicted net profit would fall 27 percent this year from a record $15 billion last year largely because of the slowdown in the United States, Toyota's most lucrative market.

In the first six months of 2008, Toyota was the world's largest automaker, selling 4,817,941 vehicles -- 277,532 vehicles ahead of General Motors Corp.

Toyota, which announced its results after the stock market close, also said it would proceed with a share buyback authorized at the annual meeting in June. It plans to buy back 15 million shares later this month.