Japan's scandal-hit Kobe Steel yanks profit forecast

Japan's crisis-hit Kobe Steel on Monday yanked its net profit forecast for the current fiscal year, saying it could not yet determine how much a snowballing fake data scandal would damage its business.

The company also cancelled a planned dividend as it withdrew its projection for a 35 billion yen ($308 million) net profit in the year to March 2018.

It had announced the forecast before the data crisis erupted several weeks ago.

The firm has admitted falsifying strength and quality data for a string of products shipped to hundreds of clients, from automakers to plane manufacturers.

The crisis at a venerable company that once employed Japan's Prime Minister Shinzo Abe has already hit wide sections of Japanese industry, including Toyota, Nissan and Honda, which used the affected materials in their vehicles.

"Even outside the product areas directly involved in this issue, we expect some clients may begin to have doubts or concerns about Kobe Steel's products," the firm's executive vice president Naoto Umehara told a press briefing.

"It's very difficult to estimate what may happen as far as contracts possibly being cancelled or replaced by other firms.

"We may have to incur extraordinary losses," he added. "That number is very difficult to estimate right now."

Also Monday, the company cut its operating-profit estimate to 75 billion yen from an earlier 80 billion yen estimate while it left revenue projections unchanged at 1.88 trillion yen for the year.

Kobe Steel shares rose 2.22 percent on Monday after the Nikkei business daily reported that major Japanese banks were preparing billions of dollars in loans to the troubled steelmaker.

It made the earnings forecast announcement after markets closed.

Kobe Steel's problems come as Nissan and smaller automaker Subaru wrestle with scandals linked to their quality inspections.

This summer, Tokyo-based auto parts supplier Takata tumbled into bankruptcy as its defective airbags were blamed for the deaths of at least 17 people globally and sparked the biggest-ever auto safety recall.

Last year, Mitsubishi Motors was caught fudging fuel-economy tests to make its cars seem more efficient than they were.

Source:AFP