Naoto Umehara (centre), executive vice-president of Kobe Steel, bows along with other managers as they announce the company is scrapping its financial forecasts CREDIT: BLOOMBERG
Kobe Steel, the Japanese industrial giant that has been rocked by revelations that it falsified data about its products’ quality, has scrapped its financial forecast in the wake of the scandal.
The move came as the company posted interim results but warned that it was unable to estimate how much the quality problems would cost.
Kobe has admitted that it wrongly certified the strength and quality of its steel, creating worries for customers as some of its products are used in high-performance and safety-critical applications such aircraft, trains and the nuclear industry.
Kobe Steel has admitted its products were not of the strength or quality advertised CREDIT: BLOOMBERG
As well as abandoning its financial forecast, Kobe added that it had scrapped the dividend for the first half of the financial year.
Executives at the business warned that the scandal could see customers abandon Kobe.
Naoto Umehara, executive vice-president of the company, said: “It’s very difficult to estimate what may happen as far as contracts possibly being cancelled or replaced by other firms.
“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.
“We may have to incur extraordinary losses. That number is very difficult to estimate right now.”
Japan’s bullet trains may have used components from Kobe whose quality faces questions CREDIT: BLOOMBERG
The warnings about the risks to the company’s future came as it reported revenue in the first half of 2017 rose by 11.3pc to 907bn yen (£6.1bn), and made profits of 45.8bn yen, almost triple the same period a year ago.
Local media reports claim that Kobe is seeking a funding injection to help it weather the current crisis.
Kobe’s troubles are just the latest in a series of scandals to rock some of Japan’s most established companies recently. Last month it emerged Nissan had been using uncertified technicians to carry out quality checks on cars for domestic customers and in 2016 Mitsubishi admitted faking fuel consumption data.
