Takata slashes outlook as automakers drop its air bag inflators
By Makiko Yamazaki
TOKYO (Reuters) - Japanese auto parts supplier Takata Corp (7312.T: Quote) slashed its annual earnings forecast on Friday, and said it had yet to determine the full impact of a global safety recall as customers began ditching its air bag inflators.
U.S. auto safety regulators earlier this week linked Takata's failing inflators to the use of ammonium nitrate as a propellant, prompting automakers from top customer Honda Motor Co (7267.T: Quote) to Mazda Motor Corp (7261.T: Quote) to say they will no longer fit the product in new cars, fanning concerns over Takata's future.
On Friday, Toyota Motor Corp (7203.T: Quote) said it, too, would stop using Takata inflators containing ammonium nitrate, which U.S. regulators believe can cause air bags to explode with excessive force, spraying shrapnel inside the vehicle. Regulators have linked them to eight deaths, all in Honda cars, triggering the recall of tens of millions of vehicles worldwide.
Takata is the only supplier to use the volatile chemical in its air bags.
Takata said it expects a net profit of 5 billion yen ($41.04 million) in the year to end-March, just a quarter of what it estimated three months ago. The Tokyo-based firm booked a combined special loss of 17.2 billion yen for the April-September period to pay a $70 million fine and legal fees.
The company said it did not expect any major impact this year from its customers dropping its products, and had yet to determine the future effects. Takata does not disclose how much inflators contribute to its overall business, but air bag products accounted for 38 percent of revenue last year.
Bloomberg News reported that Takata had hired SMBC Nikko to draw up a fundraising plan, but a senior Takata executive said the company has no cash flow or financing issues.
"Takata is currently facing no problem in financing," Yoichiro Nomura, Takata's executive vice president and chief financial officer, told reporters. "I'm saying we have no problem from a cash flow perspective." Continued...