Takata expects worse red ink amid global air-bag woes

AP News
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Posted: Feb 05, 2015 3:26 AM

TOKYO (AP) — Takata Corp., the Japanese seatbelt and air-bag maker at the center of a defect scandal, is expecting more red ink for the fiscal year through March.

It is projecting a 31 billion yen ($264 million) loss, worse than the previous forecast for a 25 billion yen ($214 million) loss, despite higher sales expected for the fiscal year.

Tokyo-based Takata is under fire for air bag inflators that can explode, shooting out metal and plastic pieces. At least five deaths and dozens of injuries have been linked to the problem worldwide.

Ten automakers have recalled about 12 million vehicles in the U.S. and about 19 million globally for problems with the air bags. The company is still trying to determine the exact cause of the problem.

Takata said that it was working with the automakers to deal with the recalls and the expenses. It has insurance to deal with much of the cost.

But it acknowledged it was unable to assess the possible future costs of the many lawsuits it faces over the defects, as well as from possible fines from U.S. authorities.

"Depending on further developments, our financial results and our cash flow may be affected," it said in a statement.

Earlier this year, Honda Motor Co., the automaker with the biggest exposure to the defective Takata air bags, was fined $70 million in the U.S. for not reporting to regulators some 1,729 complaints that its vehicles caused deaths and injuries, and for not reporting warranty claims. It was the largest civil penalty levied against an automaker.

The complaints against Honda include incidents related to air bags made by Takata as well as other defective parts. Honda has recalled more than 5 million vehicles in the U.S. since 2008 to fix a potentially fatal defect in Takata-made air bags.

Some analysts say Takata was too focused on globalization, assigning engineering and managerial resources to boosting sales, especially in the more lucrative markets abroad and allowed safety issues to fall through the cracks.

There are more than 30 million Takata air bags in the U.S. and 100 million worldwide.

Takata, founded in 1933, controls about 20 percent of the world air-bag and seat-belt markets, with plants in 20 nations, and employs about 48,000 people.

Takata also reported a fiscal third quarter loss of 32.5 billion yen ($278 million), a reversal from 8.8 billion yen profit a year earlier. Quarterly sales rose 16 percent year-on-year to 469.9 billion yen ($4 billion).

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