Takata Corporation, a Japanese automotive parts company which has been the subject of the largest safety recall for its exploding airbags, declared in a statement on Friday its net income went down to $20.5 million (2.07 billion yen) during the 2nd quarter from 3.1 billion yen one year ago.
Takata is in the process of drawing up reorganization plans following costs of lawsuits amounting to 3.5 billion yen for the company’s flawed safety devices.
The Japanese firm also maintains headquarters in Europe as well as production facilities in four continents after it acquired competitor Petri AG in 2000.
The profit plunge shows Takata’s struggles while wooing prospective investors as it still has to pay other car manufacturers for a lion’s share of repair expenditures, numerous consumer lawsuits and scrutiny from regulatory agencies. The final outcome of the third-party probe into the faulty air bags may take more time, according to a company spokesperson which can delay the process of allocating recall costs with car makers. Around 100 million air bag units have been recalled after being branded as defective.
Even then, a study made by Kelley Blue Book, an American vehicle valuation and automotive research firm, revealed consumer awareness of the Takata recall while it is the biggest in the history of the United States, remains low. It has affected one out of every eight motor vehicles on US roads.
Takata announced in its earnings report on Friday that the company already obtained results of the investigation conducted by Fraunhofer Institute of Germany late last month. However, company spokesperson Toyohiro Hishikawa explained they were still waiting for the final outcome. These results have not yet determined culpability for the malfunctioning products associated with 14 fatalities and over 150 injuries worldwide. Most of these happened in the US.
Meanwhile, Takata chief financial officer Yoichiro Nomura said last May they expect definitive findings by summer and were looking to find a financial backer by Autumn. Takata’s biggest client is another Japanese conglomerate, Honda Motor Company.
Takata has suffered a 4.4 billion yen hit due to the impact of the strong Japanese yen. The air bag inflators in question have been found in some cases to inflate forcefully and release metal shrapnel into the vehicles where they have been fitted. According to investigations, the bags contained a dangerous chemical compound known as ammonium nitrate.
Transport authorities from the US as well as auto manufacturer associations carried out their own investigations and found out that the compound can become volatile after extended exposure to heat.