Toyota Motor Corp., presently the world's largest automaker and the largest Japanese automaker, announced that it had recorded the smallest profit gain in a fiscal year and thing don’t look better in the near future as the company’s earnings may fall this quarter as the yen strengthens and U.S. demand slows.

Toyota’s net profit climbed 7.5 percent to 458.7 billion yen ($4.3 billion), or 144.43 yen a share, in the fourth quarter of the 2007 fiscal year ended in December 31. The 7.5 percent is the slowest pace Toyota saw since the fourth quarter on 2006.

The sales increased 9.2 percent, the smallest gain in 2 1/2 years.

The company also said that its profit may decline in the current quarter on slow consumer spending in the United States. Another cause would be the stronger yen which cuts earnings from exports of Prius gasoline-electric hybrids and Lexus LS sedans.

Toyota, the only car manufacturer to appear in the top 10 of the BrandZ name recognition ranking, said it will cancel 4.5 percent of current shares to boost earnings per share for a stock that fell 24 percent last year.

The worlds most profitable car producer lost momentum I the US as the economy began slowing down and the forecasts for the near future do not look very optimistic either as the quarter earnings will most likely fall due to a sharp decline in the dollar.

"The company is taking a cautious view for two main reasons: the possibility of the U.S. economy falling into recession, which will hurt consumption, and the stronger yen," said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.

Toyota’s October-December net profit, valued at $196 billion was 458.7 billion yen ($4.3 billion), a figure faintly higher than an average estimate of 455.4 billion yen by Reuters Estimates.