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Takata Promotes Stocker To President; FY2013 Net Loss Hits ¥21.1bn

Troubled Japanese safety equipment supplier Takata, which has attracted critical headlines in recent months following a spate of recalls by OEMs for faulty airbags supplied by the company, has announced that Stefan Stocker is to take over as President of the company later in 2013. Stocker will assume the titles of President and Chief Operating … Continued

Troubled Japanese safety equipment supplier Takata, which has attracted critical headlines in recent months following a spate of recalls by OEMs for faulty airbags supplied by the company, has announced that Stefan Stocker is to take over as President of the company later in 2013. Stocker will assume the titles of President and Chief Operating Officer, while Shigehisa Takada, the company’s current President, will become Chairman and Chief Executive Officer.

The announcement of the executive changes comes on the same day as the company reported a net loss of ¥21.1bn (US$208m) in the fiscal year ended 31 March 2013 (FY2013), versus a profit of ¥11.9bn in FY2012. Takata had warned in mid-April that it would take an extraordinary loss of around ¥30bn in the final quarter of FY2013, reflecting costs relating to the recalls.

Takata has reported revenue of ¥415.52bn in the latest fiscal year, up 8.6% from ¥382.74bn in the previous year, Q4 revenue alone rising 10.9% to ¥117.7bn. Operating profit in FY2013 totalled ¥14.49bn (margin of 3.5%), 6.4% ahead of the previous fiscal year’s result of ¥13.62bn (3.6%), while ordinary income was up 26.3% at ¥17.1bn (¥13.5bn). Although Takata had reported net earnings of ¥6.68bn in the first nine months of FY2013, the full-year loss was ¥21.12bn, reflecting the extraordinary charge.

Takata suffered a significant hit to its reputation as around 3.4 million vehicles are recalled for faulty airbags that it supplied

The announcements also come a matter of days after BMW reported it is to recall around 220,000 model year 2002 and 2003 cars relating to faulty airbags manufactured by Takata. The models concerned are 3 Series sedans, coupes, convertibles and wagons. Starting in July, the recall involves 64,044 cars in Germany, 42,080 in the US, 24,272 in Great Britain, 13,022 in Italy, 10,449 in France, 9,954 in Spain and 7,890 in Japan. BMW M3 and M3 convertible models are also involved. According to a National Highway Traffic Safety Administration (NHTSA) report, the faulty airbags were assembled at Takata’s Moses Lake, Washington plant, the source of the problem being defective propellant components originating from the Japanese company’s Monclova, Mexico facility.

In April 2013, Takata suffered a significant hit to its reputation as four Japanese OEMs were forced to announce recalls of just under 3.4 million vehicles globally for faulty airbags supplied by the company. Although Takata itself claimed at the time to have been notified of just 2 million vehicle recalls, the four OEMs – Toyota, Honda, Nissan and Mazda – indicated a recall total approaching 3.4 million, led by Toyota with 1.73 million, Honda with 1.14 million, Nissan with 480,000 and Mazda with 45,500. Media reports at the time also suggested that non-Japanese OEMs would be affected and that the recall would likely spread to Latin America, China and other Asian countries, the Middle East and Africa, as well as Japan, Europe and North America.

The Toyota recall encompasses 580,000 vehicles in North America, 490,000 vehicles in Europe and 320,000 in Japan and involves vehicles being taken to dealers to exchange possibly faulty inflators with new ones, a fix that could take about an hour to two and a half hours for most models. These models include the Corolla and Camry assembled between November 2000 and March 2004 as well as the Tundra and Lexus SC. The reason given for the recall was that some front passenger-side airbags may inflate too aggressively, resulting in the fracturing of the inflator casing and flying pieces of plastic. Honda’s recall involves around 680,000 vehicles in North America, 270,000 in Japan and 64,000 in Europe, encompassing the Civic, CR-V and Odyssey models. Honda issued a statement on 10 April acknowledging it will voluntarily recall approximately 426,000 model-year 2001-2003 Civics, 43,000 CR-Vs from the 2002-2003 model years and 92,000 model-year 2002 Odysseys in the US alone to replace the passenger front airbag inflator. According to the statement: “It is possible that the passenger front airbag inflators in affected vehicles may deploy with too much pressure, which may cause the inflator casing to rupture and could result in injury.”

Stocker will become the first President of Takata to be appointed outside the founding family, but will be well placed, as Chief Operating Officer and former President of the Japanese unit of Bosch, to get a firm grip on Takata’s operational challenges and to accelerate expansion, especially overseas. Swiss-born Stocker, who studied at the Tokyo Institute of Technology in the 1980s, joined Takata in February 2013 as part of efforts to diversify its management structure.

Colin Whitbread

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