Japan's Takata books third straight annual loss
Air bag maker's red ink spreads on fines, factory equipment write-downs
TOKYO -- Takata, still reeling from a massive air bag scandal, logged a third straight year of red ink in the 12 months through March, the company said Wednesday.
The Tokyo-based manufacturer's net loss swelled to 79.5 billion yen ($695 million) from 13 billion yen in the prior fiscal year. U.S. Department of Justice fines and impairment charges in its air bag business were the major factors.
Takata booked a total of 132.9 billion yen in extraordinary charges, including write-downs of 11.5 billion yen for air bag manufacturing equipment in U.S. and Mexican factories and a portion of the $1 billion fine Takata will pay to the U.S. Justice Department.
Sales slipped 8% to 662.5 billion yen, with operating profit dropping 8% to 38.9 billion yen. Takata has not booked a large portion of the recall costs, saying it is unable to adequately calculate the costs. Automakers have shouldered most of the nearly 1.3 trillion yen in recall costs.
The company's financial footing is worsening. Takata's equity capital shrank 75% to 30.2 billion yen, while its capital ratio slid 20.5 percentage points to 7% as of the end of March. Meanwhile, Takata's cash equivalents soared 39% to 74.7 billion yen, mainly from selling subsidiaries. Complications as a result of the company's ample funds have caused delays in reorganization efforts.
On the rehabilitation plan, Chief Financial Officer Yoichiro Nomura told reporters the air bag maker was working "to curb staff defections and further damage to corporate value." He added: "We want a solution as soon as possible, but I cannot comment on the timing as we are still negotiating." No details were revealed other than the process is expected to be lengthy since more than 15 automakers are involved in the talks.
U.S.-based Key Safety Systems, a group company of China's Ningbo Joyson Electronic, has been recommended as a sponsor by an external committee charged with developing a restructuring plan for Takata. Takata's creditors, such as automakers, have called for a court-led bankruptcy, while Takata's founders and executives have pushed for a private deal.