February 13, 2018 / 12:22 PM / 2 years ago

Mitsubishi Materials cuts earnings forecast due to data cheating scandal

A monitor showing the logo of Mitsubishi Materials Corp is seen in Tokyo, Japan, November 24, 2017. REUTERS/Toru Hanai

TOKYO (Reuters) - Japan’s Mitsubishi Materials Corp (5711.T) cut its annual operating profit forecast by 7 percent on Tuesday in the wake of a data cheating scandal, which it said had hurt its metals sales.

The company also announced that Chairman Hiroshi Yao will step down on April 1 to become an advisor. The move was Yao’s own decision and not to take responsibility for the data fabrication, a company spokesman said.

The Mitsubishi group company first revealed in November that its subsidiaries falsified data about products, including parts for aircraft and automobiles. It has announced further such discoveries since then, including last week when it said it had found additional examples of product data falsification at three of its subsidiaries.

On Tuesday the company said it had cut its operating profit forecast for the year ending in March, 2018, to 70 billion yen (468.31 million pounds) as its data falsification is expected to reduce its sales in metals, aluminium and advanced materials by 2-3 billion yen.

Mitsubishi Materials also said it expects a special loss of about 4-5 billion yen due to the cost of investigating the data cheating, but it kept its full-year net profit forecast unchanged due to special gains from selling its assets and higher dividend from its copper mines.

Japanese companies are facing growing pressure to disclose quality-assurance failings after widespread data falsification was uncovered at Kobe Steel Ltd (5406.T).

Japan’s industry ministry said on Tuesday that Tachibana Metal MFG Co, one of the Mitsubishi Materials units that falsified quality data, had lost the Japanese Industrial Standards (JIS) certification for its aluminium products.

Reporting by Yuka Obayashi; Editing by Susan Fenton

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