Japan’s Takata Corp, the auto safety parts supplier at the heart of a global safety crisis, has announced on Thursday it returned to profit during the first quarter of the current fiscal exercise.
The first quarter positive profit was due to increased overseas deliveries that were benefiting from the lower home currency that boosted the value of repatriated earnings and the company announced it was increasing its operating profit guidance by 18 percent. Operating profit jumped 35 percent to 10.3 billion yen while net profit reached 3.1 billion yen ($24.85 million) for the April to June period, compared to a 38.7 billion yen loss during the same time frame last year. For the year to March 2016, operating profit is forecasted to reach 40 billion yen thanks to the surprisingly strong quarter results. Still, the auto parts manufacturer decided to keep its current net profit target at 20 billion yen as it needs to factor in the rising recall-related legal fees.
Since 2008 tens of millions of cars have been recalled worldwide by Takata and more than ten automakers to replace potentially defective airbag inflators. The flawed parts can explode with too much force, sending metal debris and other shrapnel inside the cabin at high velocity, with regulators globally tying the flaw to eight fatalities and hundreds of injuries. While automakers are currently bearing the brunt of the expenses for the recalls as the root cause is still unknown, Takata has not yet moved to set provisions for the safety campaigns – even though the company is subject to numerous lawsuits and probes.