Despite air bag controversy, Takata swings to Q1 net profit on higher overseas sales, lifts guidance

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Published: August 6, 2015 1:56:56 PM

Japan's Takata Corp, whose air bag inflators are at the centre of a global safety recall, on Thursday said it swung to a net profit in the first quarter due to higher overseas sales, and lifted its operating profit forecast by 18 percent.

Japan’s Takata Corp, whose air bag inflators are at the centre of a global safety recall, on Thursday said it swung to a net profit in the first quarter due to higher overseas sales, and lifted its operating profit forecast by 18 percent.

Net profit was 3.1 billion yen ($24.85 million) in April-June, versus a 38.7 billion yen loss a year prior. Operating profit rose 35 percent to 10.3 billion yen.

For the year to March, operating profit is likely to be 40 billion yen instead of 34 billion yen due to a stronger-than-expected first quarter. But Takata kept its net profit view at 20 billion yen to account for higher recall-related legal fees.

Millions of cars have been recalled since 2008 to replace Takata inflators. Regulators have linked the component to eight deaths, saying it can deploy with too much force and spray shrapnel inside vehicles. Automakers are bearing the cost of most recalls while the root cause is investigated.

Takata has not set aside provisions for most of the recalled cars. It also faces multiple lawsuits and a U.S. regulatory investigation which could see its costs balloon.

On Thursday, Takata repeated that it could not reasonably calculate the cost of the recall, lawsuits and any fines.

Takata shares ended up 4 percent ahead of earnings, while the broader Topix index rose 0.5 percent.      ($1 = 124.7500 yen)

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