Business / Corporate

Scandal-hit KYB braces for first annual loss in three years

JIJI

Scandal-hit KYB Corp. on Tuesday projected a consolidated net loss in fiscal 2018, its first in three years, lowering its bottom-line forecast to a loss of ¥2.3 billion ($196.8 million) from ¥16 billion in profit.

The downward revision for the year through March 2019 is due chiefly to the costs of replacing earthquake-mitigating oil dampers affected by the group’s data manipulation scandal.

For April to September, KYB booked ¥14.4 billion in reserves mainly for product replacements.

At present, KYB expects that more than 10,000 dampers will need to be replaced. But the company remains unable to fix the total costs for replacement and compensation to those affected.

The company’s loss is therefore likely to expand further.

“We’re sorry that our inappropriate conduct has caused inconvenience,” Takaaki Kato, executive vice president, told a news conference.

For more than 30 percent of the products that will be replaced, replacement work will involve partial destruction of walls. KYB is not sure how much its replacement costs will increase because of this.

In addition, the company does not know how much compensation it will have to pay for the suspension of business at commercial facilities and the temporary relocation of residents from condominiums during replacement work.

For the first half of fiscal 2018, the company reported a net loss of ¥11.972 billion, also reflecting a ¥2 billion impairment loss on its quake damper subsidiary, which stopped receiving orders.

KYB skipped first-half dividend payments and retracted its term-end dividend projection of ¥80 per share for fiscal 2018.