Troubled air bag maker Takata says to return to profit in 2015/16
By Mari Saito
TOKYO (Reuters) - Japan's Takata Corp (7312.T: Quote) said it expects to return to profit this financial year on higher Asian and U.S. sales, but the troubled company made few provisions for possible costs related to a massive global recall of its exploding air bags.
Around 25 million cars have been recalled worldwide since 2008 over Takata air bag inflators that have erupted with too much force, spraying shrapnel inside the car.
Takata forecast a net profit of 20 billion yen ($167 million) for the year through next March, on a 9 percent increase in global sales to 700 billion yen. The profit compares with a loss of 29.6 billion yen in the just-ended financial year, when the company booked a special loss of 58.7 billion yen mostly to cover recall costs.
Takata's forecast factors in a 7 billion yen expense to cover legal and consulting fees, but does not include other costs related to recalls.
"We are aware that there are risks but we are not able to reasonably calculate the potential cost so we cannot include them in our balance sheet or our forecast," Yoichiro Nomura, the company's chief financial officer, told reporters at an earnings briefing.
Six deaths have so far been linked to the defective component, all on cars made by Honda Motor Co (7267.T: Quote), which announced disappointing profit forecasts last week citing high quality-related costs.
Takata faces multiple class action lawsuits in the United States and Canada as well as a U.S. criminal investigation and regulatory probe.
At the start of the briefing, Nomura and other executives bowed deeply and apologized to those affected by the recalls. Continued...