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(Bloomberg) -- Takata Corp., the Japanese air-bag 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 ($260 million) loss in the year ending March, the Tokyo-based company said today in a statement. 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 air bags, 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.
“This may not be the end of the world for Takata,” said Yusuke Ueda, a credit analyst at Bank of America Merrill Lynch in Tokyo. “But down the road, they are going to face tough business environment as they will probably lose new orders.”
The company has set aside 50.6 billion yen in the nine months ended December in recall reserves, compared with 47.6 billion yen in the first six months of the fiscal year.
Shares of Takata rose 1.2 percent to 1,356 yen in Tokyo trading. The shares declined 52 percent last year, compared with the 8.1 percent gain in the benchmark Topix index.
Takata has said it will increase replacement air-bag 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 air bags. 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.
To contact the reporters on this story: Ma Jie in Tokyo at firstname.lastname@example.org; Masatsugu Horie in Osaka at email@example.com To contact the editors responsible for this story: Chua Kong Ho at firstname.lastname@example.org Subramaniam Sharma, Dave McCombs