Akebono Brake Industry Co Ltd has become the latest addition to a series of corporate scandals in Japan, cutting earnings forecasts and executive pay after confirming problematic accounting of sales to distributors.
The car parts maker is expected to lose ￥7 billion (US$58 million) in the fiscal year ending in March next year, compared with a previous forecast for profit of ￥1.5 billion. The Tokyo-based company also trimmed its sales forecast by 1.7 percent to ￥283 billion, and reduced compensation for its president and three other executives for three months.
Akebono Brake inflated its sales and profit by “channel stuffing” its distributors with too much inventory, according to a statement yesterday. The company said that on Nov. 4 it found evidence revenue was overstated by ￥210 million in the second quarter and delayed its earnings announcement by about a month.
The scandal at Akebono Brake follows Toshiba Corp’s profit writedowns and Takata Corp’s acknowledgment of risk it might not survive recalls of more than 40 million vehicles due to its faulty air bags.
Japanese Prime Minister Shinzo Abe has said Japan needs more support from global investors and has pressed companies to improve corporate governance by boosting transparency and adding independent board members.
The flurry of scandals are a risk to Japan Inc’s reputation for quality and order. Toyo Tire & Rubber Co in October said an internal probe found one unit manipulated quality testing data for rubber products supplied to 18 customers over a decade. Asahi Kasei Corp said one of its units had falsified data for foundation piles in condominiums, after one building sagged sideways. Matsumotokiyoshi Holdings Co, a Japanese drugstore chain, said it found likely accounting irregularities and is investigating the president of one unit it suspects inflated inventories to hide past losses.
Founded in 1929, Akebono Brake is one of the oldest companies in Japan’s auto industry. It counts the world’s biggest carmakers among its customers, including Toyota Motor Corp, Volkswagen AG and General Motors Co.
The supplier’s shares yesterday rose as much as 5.2 percent and closed up by 2.9 percent, its biggest gain since Oct. 7. The shares are down 12 percent since its first disclosure of the accounting issues on Nov. 4.
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