TOKYO (Bloomberg) -- Takata Corp., the Japanese airbag maker at the center of a safety crisis, widened its loss forecast for this fiscal year as automakers led by Honda Motor Co. expanded recalls to investigate the cause of malfunctions.
The net loss will probably be 31 billion yen ($264 million) in the year ending March, the supplier said today. In November, Takata had widened its loss forecast to 25 billion yen and said that it’s difficult to estimate the amount of damage claims it has received in the U.S.
Honda, Takata’s biggest customer, last month said it’s investigating a fatal crash in Houston related to airbags, the fifth U.S. death linked to the safety devices. The woes for Takata are mounting after last year’s massive 10-automaker recall of inflators that could explode with deadly results.
“There still remains uncertainty because of risks of future loss from investigative recalls and class actions,” said Akio Kamimura, an analyst at Japan Credit Rating Agency in Tokyo. “We need to continue watching Takata closely.”
The company has set aside 50.6 billion yen ($431 million) in the nine months ended December in recall reserves, compared with 47.6 billion yen in the first six months of the fiscal year. Takata said the number may swell if the company’s products were proved faulty in carmakers’ investigative recalls, for which Takata hasn’t set aside any provision.
The company's net loss was 32.5 billion yen in the nine months ended December, compared with 8.8 billion in net income in the year-earlier period. Operating profit rose 8.9 percent to 23.4 billion yen as demand for cars in the U.S. climbed, according to Takata.
Takata has said it will increase replacement airbag production to 450,000 repair kits from January at its plant in Mexico. The company also will boost capacity to build the components at factories in China and Germany within a year, Japan’s Nikkei newspaper reported in December.
Carmakers have also reached out to Takata’s rivals, such as Autoliv Inc., for replacement airbags. Autoliv has agreements with several carmakers to expand its inflators capacity and will supply them this year and in 2016, the company said Jan. 14 in a statement. It’s also in discussions to supply “millions of additional units,” the Stockholm-based maker of auto-safety devices said.
Takata Chairman Shigehisa Takada replaced Swiss national Stefan Stocker as president in December as part of the reorganization amid the quality crisis. Takada, who with his mother controls the Tokyo-based auto-parts supplier through a family holding company, took a 50 percent pay cut for four months in contrition.