Tokyo ? Toyota Motor Corp., battered by plunging global sales, reported its worst annual loss since its 1937 founding — and forecast even more red ink in the year ahead.

The world’s largest carmaker said Friday its net loss for the January-March quarter was $7.7 billion — bigger than General Motors reported for the same period.

That brings Toyota’s fiscal year loss to a larger-than-expected $4.4 billion, a dramatic reversal from the record profit of 1.72 trillion yen it earned the previous year.

With demand contracting sharply in the U.S., Europe and Japan, Toyota is projecting its losses for the fiscal year through March 2010 will grow to $5.55 billion.

President Katsuaki Watanabe said the devastating results were caused by “the significant deterioration in vehicle sales, particularly in the U.S. and Europe,” the strong yen and the rising cost of raw materials.