Takata Corporation Business Report FY ended Mar. 2016
Financial Overview |
(in million of JPY) |
| FY ended Mar. 31, 2016 | FY ended Mar. 31, 2015 | Rate of Change (%) |
Factors | |
| Overall | ||||
| Sales | 718,003 | 642,810 | 11.7 | -Sales were higher year-on-year (y/y), with all regions reporting higher sales. |
| Operating income | 42,133 | 32,958 | 27.8 | -Sales declined y/y in Japan and Europe, but increased in the Americas and Asia. |
| Ordinary income | 35,206 | 40,657 | (13.4) | -Ordinary income declined y/y due to exchange losses. |
| Net income | (13,075) | (29,558) | - |
-The Company posted a net loss due to extraordinary losses incurred from recall programs, civil fines in the U.S., and other airbag related costs that led to increased provision for product warranties. |
| Sales by region | ||||
| Japan | 77,040 | 75,403 | 2.2 | -Although overall automotive production levels decreased y/y, higher sales of vehicles on which the Company's products are being equipped and higher imports of products for Group companies helped improve results. |
| Americas | 319,603 | 272,274 | 17.4 | -Sales were higher y/y, due to strong sales and automotive production in the U.S., despite automotive production and sales levels remained sluggish in Brazil. |
| Europe | 170,638 | 166,696 | 2.4 | -Sales were higher y/y, due to automotive production levels were high in all major countries, especially in Germany. |
| Asia | 150,720 | 128,435 | 17.4 | -Automotive production and sales levels increased in every country. |
Response to Airbag Recall
-The Company has made responding to the airbag recall and the market measures its most important and number one priority. In addition to cooperating with all of the OEMs in implementing the market measures, the Company is devoting its entire management resources toward manufacturing and delivering the necessary replacement inflators and airbags in carrying out the market measures.
-The Company jointly with Fraunhofer-Gesellschaft conducted an investigation to look into the causes; however, it was unable to reach a cause. According to analyses conducted up until now, when inflators are subjected to high-temperature/high humidity environments for long periods of time, and when this situation is compounded with other causes such as variances in precision because of production reasons, some inflators have the possibility developing unheard of levels of internal pressure and fail. Also, in inspecting and then producing the subject inflators originally as parts, the possibility of this happening over a long period of time was never known or noticed, since the inflators were within the allowable tolerances when tested and evaluated by OEMs.
-The Company is fully cooperating with the Consent Order that was agreed with the National Highway Traffic Safety Administration (NHTSA) and other remedies agreed under the demands set out by the relevant authorities.
Agreement Reached with the NHTSA’s Consent Order on May 18, 2015
-On May 18, 2015, U.S. subsidiary TK Holdings Inc. (TKH) entered into a Consent Order with the National Highway Traffic Safety Administration (NHTSA) under which TKH agreed to take action to address public safety concerns involved in NHTSA's investigation of the Company's airbag inflators. In accordance with the Consent Order, TKH has filed with NHTSA four Defect Information Reports (DIR) that contemplate expanded recalls by vehicle manufacturers, to be overseen by NHTSA, covering several types of driver‐side and passenger‐side inflators manufactured by the Company.The Reports establish a process to prioritize the replacement of inflators based upon age and location in accordance with testing results to date. (From a press release on May 20, 2015)
-U.S. Transportation Secretary Anthony Foxx announced on May 19 that at the Department's insistence, the Company has acknowledged that a defect exists in its air bag inflators. The inflators had been made with a propellant that can degrade over time and has led to ruptures that have been blamed for six deaths worldwide. The Company has agreed to a national recall of certain types of driver and passenger side air bag inflators, expanding the number of vehicles now to be recalled to nearly 34 million. (From Takata release on May 20, 2015 and NHTSA release on May 19, 2015)
Agreement Reached with the NHTSA’s Consent Order on November 3, 2015
-The Company announced that it has signed a Consent Order with the U.S. National Highway Traffic Safety Administration (NHTSA) regarding a series of its airbag recall problems. As part of the Consent Order, the Company has agreed to pay a civil penalty of USD 70 million (approximately JPY 8.5 billion). The Company may also become liable for additional civil penalties of up to USD 130 million (approximately JPY 15.78 billion) if it fails to meet certain obligations of the order. The Company still has to deal with various unsolved issues related to recall costs and lawsuits, and is faced with uncertainties over its future business including production of new inflator propellants and securing new contracts. (From an article in the Nikkan Jidosha Shimbun on November 5, 2015)
-The Company announced that it has decided to phase out the production and sale of non-desiccated Phase Stabilized Ammonium Nitrate (PSAN) inflators by the end of 2018. In the U.S., it has agreed not to enter into any new contracts to provide PSAN inflators, and to discontinue its supply of these inflators for driver airbags and front passenger side airbags, except those for the aftermarket. The Company says it will switch to using propellants made from guanidine nitrate in its airbag inflators. (From an article in the Nikkan Jidosha Shimbun on November 5, 2015)
Agreement Reached with the NHTSA’s Consent Order on May 4, 2016
-The Company is to submit five Defect Information Reports (DIRs) for front airbag inflators in certain model year vehicles and in certain regions with high temperatures/high humidity, for front driver and passenger airbag inflators that do not contain a moisture-absorbing desiccant and which had not been subject to the recall up until now.
Recent Development Outside Japan
-Its third plant, Takata (Jingzhou) Automotive Component Co., Ltd., launched production.
-Takata Safety Systems Hungary Kft. launched production of airbags and inflators.
-Increased production capacity of seatbelt buckles.
Inflator production increase
-The Company announced that it will double production of inflators for recalled vehicles to 900,000 units per month by September 2015. The Company normally produces replacement inflators solely in Mexico. It has decided to produce the replacement products also in the U.S., Germany, and China in order to speed up the recall processes initiated by automakers. In connection with a series of recalls, the Mexican plant has expanded its replacement inflator production to 450,000 units from 350,000 units per month since December 2014. With over 17 million vehicles using Takata airbags being recalled in the U.S. alone, the shortage of replacement inflators is becoming more serious and is causing delays in the recall processes. (From an article in the Nikkan Jidosha Shimbun on March 4, 2015)
R&D Expenditure |
(in million JPY) |
| FY ended Mar. 31, 2016 | FY ended Mar. 31, 2015 | FY ended Mar. 31, 2014 | |
| Japan | 2,977 | 2,662 | 2,470 |
| Americas | 10,070 | 10,104 | 8,991 |
| Europe | 8,821 | 9,107 | 9,186 |
| Asia | 3,068 | 2,535 | 2,302 |
| Corporate | (195) | (26) | 125 |
| Total | 24,742 | 24,383 | 23,075 |
| Percent of total sales (%) | 3.4 | 3.8 | 4.1 |
-The Company plans to spend JPY 26,500 million for R&D in the FY ending in March 2017, which is a 7.1% increase year-over-year (y/y) and which accounts for 4.0% of sales.
R&D Structure
-The Company has three R&D centers, one in Japan (Shiga), one in the USA (Detroit), and one in Europe (Berlin). In addition, the Company is working to develop a global R&D framework, with the addition of an R&D center in China that will conduct R&D activities for emerging countries.
R&D Activities
-The Company is working to develop safety systems that integrate passive safety aspects designed to protect occupants during impacts so as to reduce injuries to the maximum extent possible, with active safety aspects designed to foresee dangers and prevent accidents from happening or at least reduce the level of impact.
-Studies and R&D activities based on approaches to collision types and system functions.
- Systems to protect passengers during head-on collisions
- Systems to protect passengers against lateral impacts and rollovers
- Systems to protect pedestrians
- Systems to protect motorcycle riders
- Collision avoidance and driver-support systems
-Development of devices containing protection systems, such as inflators and electronics.
Product Development
-Development of occupant-sensing technology that is an absolute must to achieve autonomous driving.
- Driver-monitoring system
- Hands on wheel system: Preparing to achieve objective, which is launching production in2017
Capital Expenditure |
(in million JPY) |
| FY ended Mar. 31, 2016 | FY ended Mar. 31, 2015 | FY ended Mar. 31, 2014 | |
| Japan | 1,632 | 2,330 | 1,786 |
| Americas | 13,424 | 11,887 | 7,885 |
| Europe | 7,170 | 12,019 | 5,005 |
| Asia | 6,153 | 9,027 | 3,768 |
| Total | 28,381 | 35,265 | 18,445 |
-The Company is planning to spend JPY 23,000 million in capital investments in the fiscal year that ended in March 2017, which is a 20.3% increase y/y and which accounts for 3.4% of sales.
Planned capital investments |
(As of Mar. 31, 2016) |
| Plant Name (Location) |
Equipment to be installed | Estimated amount of investment (in million JPY) |
From | To |
| Takata Kyushu Corporation (Saga Pref., Japan) |
Equipment to produce seat belt buckles | 1,320 | Oct. 2014 | Mar. 2017 |
Outlook for FY ending Mar. 31, 2017 |
(in million JPY) |
| FY ending Mar. 31, 2017 (Forecast) |
FY ended Mar. 31, 2016 (Actual Results) |
Rate of change (%) |
Factors | |
| Overall | ||||
| Sales | 670,000 | 718,003 | (6.7) | - |
| Operating income | 33,000 | 42,133 | (21.7) | - |
| Ordinary income | 32,500 | 35,206 | (7.7) | - |
| Net income | 13,000 | (13,075) | - | - |
| Sales by region (Total sales including internal transactions) | ||||
| Japan | 120,000 | 127,253 | (5.7) | -Lower profits due to fewer sales; increase in recall expenses, higher yen improved materials costs |
| Americas | 310,000 | 342,418 | (9.5) | -Higher yen negatively impacted materials costs; increase in recall expenses, speeding up streamlining and fixed-cost-reduction initiatives, added production equipment to improve quality in Mexico |
| Europe | 170,000 | 183,790 | (7.5) | -Lower profits due to fewer sales, results of accelerated efforts to streamline operations and reduce fixed costs, launched production at plant in Hungary |
| Asia | 170,000 | 181,248 | (6.2) | -Higher yen negatively impacted materials costs; higher labor costs in China, launched production at third plant in China |
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