Toyota Motor Corp <7203.T> reported its first quarterly loss in two years as Japan's biggest earthquake hammered production and the yen's rise hit profitability on exports.

The world's biggest automaker made an operating loss of 108 billion yen ($1.4 billion) in the April-June quarter, compared with a profit of 211.7 billion yen a year ago. The result was better than the average loss estimate of 190 billion yen in a survey of six analysts by Thomson Reuters I/B/E/S.

Following are reactions from fund managers and analysts:

HIDEYUKI SUZUKI, GENERAL MANAGER INVESTMENT RESEARCH, SBI SECURITIES

Toyota has shown that it is recovering well from the quake, but its upward revision of operating profit is below market expectations. Their currency rate forecast is lower than the actual rate and with the U.S. economy faltering, there is going to be pressure on the yen to rise further. Automakers risk a double punch of a high yen and weak demand.

CATHY WU, FUND MANAGER, ING FUNDS

The earthquake's impact is nearing an end, while the stronger yen will continue to dent Toyota's earnings. If the U.S. dollar remains weak amid the U.S. debt problems, Toyota and the rest of Japan's exporters will be under pressure.

Toyota is still far ahead of rivals like Nissan and Hyundai, but the company is struggling with the stronger yen and negative images due to recalls and other incidents that happened earlier over the last months.

If Toyota did not adjust its strategy soon enough, it would lose more market shares to competitors.

Toyota is at a turning point. It needs to shift more production base overseas and be more aggressive in taping the Chinese market.

KOJI TODA, CHIEF FUND MANAGER, RESONA BANK

It is a relief to see that their production is returning to normal. They have raised their earnings forecasts. However, looking at the share price and PE, the profits are still too low. The share price won't rise until profits come back a bit more.

Unlike in the past, their products are mostly consumed outside Japan, so there is no need for them to go to the trouble of manufacturing in Japan. In the medium term, the trend will be for them to produce where the products are consumed. I don't think it can be stopped.

TAKASHI AOKI, VICE PRESIDENT, EQUITY INVESTMENT DIVISION, MIZUHO ASSET MANAGEMENT

The first impression is not bad. A company that can generate such a level of profit at a dollar/yen rate of 80 yen doesn't look bad.

But it's hard to say if this is good news for its stock performance, because factors outside the company's efforts, such as the yen exchange rate and the U.S. sovereign debt issue, will have a bigger impact. I'm personally closely looking at the yen level.

LEE YONG-JIK, FUND MANAGER, PINE BRIDGE INVESTMENT

Toyota will try hard to make up for the lost time. We expect Toyota to aggressively launch promotions for the sake of profitability to gain back the market share.

But in terms of currencies, Toyota is still at a disadvantage (compared to its) Korean rivals. It also remains to be seen whether Toyota's Camry will be a real threat to Korean carmakers as the latter have significantly increased their product quality.

MAKOTO KIKUCHI, CEO OF MYOJO ASSET MANAGEMENT

The results and the outlook hike were not a surprise.

It's positive that Toyota hiked its full-year outlook as its supply situation is showing signs of recovery, but its profitability is still lower than its rivals such as Nissan and Honda.

(Reporting by Daiki Iga, Isabel Reynolds, Yuko Inoue, Ayai Tomisawa and Hyunjoo Jin; Compiled by Frederik Richter)

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