Takatas record-setting recall continues to cost it dearly

Takata's record-setting recall continues to cost it dearly

Troubled airbag supplier Takata Corporation said it expects to book non-operating income (foreign exchange gain) and special losses (recall costs) in the third quarter of the current fiscal year ending 31 March, 2017.

Having booked a first half JPY5,680m foreign exchange loss as a non-operating expense, exchange rates have now swung in the company's favour and it made a gain of JPY9,751m in the third quarter, leading to a nine-month boost of JPY4,071m.

On the other hand it expects losses of JPY10,628m to cover costs incurred for settlements related to recalls of airbags/inflators made by its US subsidiary. JPY7,097m had previously been booked in interim results for the full year.

Takata also expects to record a provision of JPY96,927m as a US Department of Justice (DoJ) settlement amount for payment of a fine and the establishment of a compensation fund totaling US$1bn associated with an agreement reached with the DoJ on 13 January. The JPY96,927m (US$862m) represents the difference between the total amount of the settlement
of US$1,000m minus product warranty provisions already recorded of US$138m.

Takata said it would elaborate once it had fully assessed the effect of the costs.