Takata Lowers Full-Year Profit Forecast Amid Customer ExodusMa Jie and Masatsugu Horie
Takata Corp. lowered its full-year profit forecast after incurring losses related to recalls and as Toyota Motor Corp. joined Honda Motor Co. in saying they won’t use key components made by the Japanese air-bag maker.
Net income may be 5 billion yen ($41 million) in the fiscal year through March, Takata said Friday, down from the company’s 20 billion yen forecast made in May. The Tokyo-based company recorded a special loss of about 8.5 billion yen in the July-September period, following a consent order it reached with National Highway Traffic Safety Administration.
Takata’s cut in forecast comes as an increasing number of its customers say they no longer will use its air-bag inflators linked to scores of injuries and seven deaths in the U.S. Subaru-maker Fuji Heavy Industries Ltd. and Mitsubishi Motors Corp. are among automakers considering such a step after Toyota, Honda and Mazda Motor Corp.’s decision to stop using Takata’s ammonium nitrate inflators.
Takata fell 6.2 percent in Tokyo trading before the announcement, resulting in a 39 percent three-day decline, the most on record.
The U.S. National Highway Traffic Safety Administration this week fined Takata as much as a record $200 million, including a $70 million civil penalty to be paid in six installments by October 2020. The agency ordered the company to phase out ammonium nitrate-based inflators by 2018. It also said Takata provided “selective, incomplete or inaccurate information” to the agency and customers since at least 2009.
Hours after the agency’s order, Honda, its largest customer, made the announcement that it won’t use Takata inflators in future models.
The loss was significant as it led analysts to openly question Takata’s ability to survive and even President Shigehisa Takada acknowledged a risk to the company’s existence. Asked whether the company will survive, 49-year-old Takada told reporters Wednesday, “there’s risk.”
Any blows to Takata’s air bag business are devastating because it’s the company’s largest product segment, at 38 percent of its 642.8 billion yen in sales for the fiscal year ending in March. Inflators are only a portion of its air bag products, and other components the company has to fall back on include seat belts, steering wheels, electronics and child seats.
The moves by Honda and Mazda add to a shift away from Takata that was already taking place involving the use of the replacement inflators for recalled vehicles. By March, Daicel Corp., Autoliv Inc. and TRW Automotive will make about 68 percent of those components, according to a letter Takata sent to NHTSA in July.
Honda, which has bought parts from the supplier for more than 50 years, said this week it will be able to source all replacement inflators from suppliers other than Takata in the foreseeable future. The carmaker will be buying the substitute components from all three of Takata’s competitors.