Despite its worst recall crisis late last year, Toyota has beaten forecasts with a fourth-quarter profit. Toyota’s heavy cost cutting and its aggressive sales incentives quickly drew U.S. customers back to showrooms.

On Tuesday, Toyota Motor Corp forecasted a slower-than-expected recovery in profits this year. The company expects a stronger yen and Europe's debt problems will hamper efforts to undo the damage from the worst recall crisis in its history.

The world's largest automaker, however, beat forecasts with a fourth-quarter profit as it cut costs, and its aggressive sales incentives swiftly drew U.S. customers back to showrooms.

The result was announced at the company’s Tokyo headquarters.

[Akio Toyoda, President, Toyota Motor Corp]: (Japanese, male)
"The operating profit of 147.5 billion yen during the year ending March 2010 was indeed thanks to the support from all of you, and I appreciate it deeply from my heart."

Toyota had flagged a small operating loss for last year, estimating a $2 billion hit from lost sales from the damage to its brand and the recall costs.

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[Akio Toyoda, President, Toyota Motor Corp]: (Japanese, male)
"We managed to stand on the new start-line. I believe this year is truly the starting point of a new Toyota, and we should focus on the new strategies for growth."

But its projection for operating profit for the next financial year was little more than half market forecasts.

[Akio Toyoda, President, Toyota Motor Corp]: (Japanese, male)
"There's no change in the fact that we are in stormy waters. But now I feel that even in the storm, we can see a ray of sunlight in the distance."

Industry analysts say the lingering crisis will delay the top automaker's return to rapid growth.

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Toyota has beaten the market's growth in its most important U.S. market in the past two months with the help of incentives including zero percent financing, which will be offered to at least the end of May.