Japan's Takata still tallying costs of air bag recall

Thu Jun 26, 2014 7:30am EDT
 
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By Yoko Kubota and Maki Shiraki

TOKYO (Reuters) - Japanese auto parts maker Takata Corp (7312.T: Quote) could face a $500 million charge and a net loss this year - its second in three years - as a widening recall of air bag inflators begins to raise worries despite its deep pockets.

Takata Chief Executive Shigehisa Takada apologized to shareholders at the company's annual meeting on Thursday but said the company was still tallying the costs of the recall, according to those who attended the closed-door session.

Automakers have recalled 10.5 million vehicles over five years to fix Takata air bags deemed at risk of exploding and shooting shrapnel at drivers and passengers, in what has become one of the five biggest recalls in automotive history. At least two deaths are alleged to have been caused by faulty air bags.

Creditors are not overly worried about the financial health of Takata, which has about $1 billion of cash on its books, but are closely watching the company, banking sources said.

The world's second-biggest auto safety parts maker faced questions from shareholders about potential losses and recall-related costs as well as its sluggish share performance at the shareholders' meeting, which came just days after the latest recall of 5.2 million vehicles.

Takata's shares have fallen nearly 30 percent since the start of the year compared with a 6 percent drop in Tokyo's benchmark Nikkei average .N225. They closed down 0.7 percent at 2,163 yen on Thursday.

"We shareholders have been proud of Takata and how its Japanese technology has been protecting people globally, so it was shocking to learn that people have died," said Shinji Sakagami, 45, a high school teacher who owns 300 Takata shares.

"I don't think I'll keep the stock much longer."   Continued...

 
A man walks past a sign board of Japanese auto parts maker Takata Corp's Annual General Meeting in Tokyo June 26, 2014. REUTERS/Yuya Shino