TOKYO (Reuters) – Takata Corp, whose potentially defective air bags have been linked to four deaths in the United States, warned of a bigger full-year loss and skipped its dividend – the first time it did not offer a payout since it listed in 2006.
The Japanese automotive safety equipment maker has been beset by chronic problems with defective inflators in its air bags, which can explode with excessive force and spray metal shards inside the vehicle. The air bags, used by many leading car makers, are the focus of an US regulatory probe and have prompted the recall of some 17 million cars worldwide in the past six years.
Before a packed briefing room at the Tokyo Stock Exchange, Yoichiro Nomura, executive vice president and chief financial officer, bowed in apology to customers affected by the recalls. “We would like to apologise for worrying and concerning all our customers, automakers and shareholders who have been affected by repeated recalls of cars with our air bags,” he said.
Takata, which has 22 per cent of the global market for air bag inflators – the explosive device that allows the air bag to inflate in a fraction of a second in the event of a crash – has already set aside 75 billion yen ($655 million), around enough to cover the recall of up to 9 million cars. It said it took an additional 2.3 billion yen charge in July-September to cover recalls of another 160,000 cars, but had not put aside funds to cover potential US class action lawsuits against it.
The company booked a 49.9 billion yen special loss, which includes other costs unrelated to recalls, for April-September.
As uncertainty remains over potential future recalls and the likely cost of a growing number of legal cases against Takata and some automakers, including Honda Motor Co, its biggest customer for inflators, shares in Takata have almost halved in value since January.
Takata, which has a strong cash position for now, revised its full-year forecast to a 25 billion yen ($218.4 million) net loss from a previous forecast for a 24 billion yen loss. It reported a first-half net loss of 35.24 billion yen, versus a year-earlier profit of 769 million yen.
Nomura said the forecasts were calculated on the assumption that Takata, with “manufacturer’s liability”, will bear the full cost of the recalls.