Business / Corporate

Kobe Steel expects net profit for fiscal 2017 despite data fabrication scandal

Kyodo

Kobe Steel Ltd. said Thursday it expects to swing back into the black in fiscal 2017 despite a data fabrication scandal that surfaced last fall, aided by brisk hydraulic shovel sales in China.

The nation’s third-largest steel-maker is now expecting a group net profit of ¥45 billion ($413 million) for the business year ending in March, its first net profit in three years, on sales of ¥1.89 trillion, up 0.5 percent from estimates in October.

The scandal forced the company to withdraw its net profit forecast in October. In the latest estimate, it said the scandal has dented its profits by around ¥10 billion — ¥4 billion at its aluminum and copper operations and ¥6 billion at its steel divisions — in the current year.

The firm has admitted to falsifying product and specification data for aluminum, copper, steel powder and special steel products as well as materials for liquid crystal displays.

Kobe Steel left its group operating profit outlook unchanged for fiscal 2017 at ¥75 billion, a more than sevenfold increase from the previous year.

For the nine months through December, the company reported a group net profit of ¥55.82 billion after incurring a net loss in the corresponding period in the previous year. It booked a group operating profit of ¥71.84 billion on sales of ¥1.38 trillion, up 13.3 percent.

Products affected by the data falsification were supplied to 525 companies, ranging from major carmakers to shinkansen operators, and were used in aircraft, space rockets and defense equipment.

The company said safety concerns had been cleared at 99 percent of clients that received affected products.

Major carmakers including Toyota Motor Corp. and Honda Motor Co. have said Kobe Steel materials were used in their vehicles but that they have not found any safety problems.

The nation’s corporate world was thrown into crisis last year as a string of quality control problems came to light.

Nissan Motor Co. and Subaru Corp. admitted using uncertified workers to conduct new car tests at their domestic plants, triggering a recall in the domestic market. Mitsubishi Materials Corp. subsidiaries and Toray Industries Inc. also said products with falsified data were supplied to customers.