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4-Traders Homepage  >  Equities  >  Tokyo  >  Toray Industries Inc    3402   JP3621000003

TORAY INDUSTRIES INC (3402)
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Japan Inc scandals widen as Toray admits cheating

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11/28/2017 | 07:56am CEST
Toray Industries' president, Akihiro Nikkaku attends a news conference in Tokyo

TOKYO (Reuters) - Japan's Toray Industries Inc (>> Toray Industries Inc) on Tuesday revealed 149 cases of quality data falsification at a materials-making subsidiary spanning eight years, in the latest quality-assurance scandal to hit a Japanese manufacturer.

TOKYO (Reuters) - Japan's Toray Industries Inc (>> Toray Industries Inc) on Tuesday revealed 149 cases of quality data falsification at a materials-making subsidiary spanning eight years, in the latest quality-assurance scandal to hit a Japanese manufacturer.

The world's largest maker of carbon fiber composite materials said the cheating involved products including tire-strengthening cords sold to 13 clients by Toray Hybrid Cord Inc. A broader probe into possible wrongdoing across the group was ongoing.

Toray did not name any affected customers but ruled out U.S. aircraft maker Boeing Co (>> Boeing Company (The)), for which the Japanese company is a major supplier of carbon fiber used in passenger jets, and Uniqlo parent Fast Retailing Co Ltd (>> Fast Retailing Co Ltd), which uses its products in its best-selling Heattech clothing line.

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

Toray said its subsidiary became aware of its problems in July last year, and the group learnt of them in October. It only decided to publicly disclose the cheating after rumors appeared earlier this month in an anonymous online post.

"There were no legal violations or safety problems; this was between us and our customers, and so there was no need to disclose it," Toray President Akihiro Nikkaku told a news conference.

The internet post forced the company to "give a proper explanation before rumors spread", Nikkaku said, adding that even if similar cases were found in the future the company would not be required to make them public.

The comments are likely to fuel concerns about Japanese manufacturers' governance and their commitment to stamp out cheating.

Last week Mitsubishi Materials Corp (>> Mitsubishi Materials Corp) admitted that it may have sent products with falsified data to scores of customers, and possibly continued to ship these products for months after the wrongdoing was discovered.

Automakers Nissan Motor Co Ltd (>> Nissan Motor Co Ltd) and Subaru Corp (>> Subaru Corp) have also been hit by compliance scandals.

The admissions threaten to damage trust in Japan's manufacturing industry at a time of growing competition from its Asian neighbors such as China and South Korea.

Toray's shares plunged more than 8 percent following the announcement and closed down 5.3 percent in a flat broader market.

HIGH FLYER

While Toray is not among the most-recognized Japanese brands internationally, its strong, light carbon fiber materials are used in Boeing's 777X passenger jet and 787 Dreamliner.

The company is represented at the heart of Japan's conservative corporate establishment, with former president Sadayuki Sakakibara heading the Keidanren business lobby.

Toray said it was in the process of notifying clients about the falsification and had not heard back from them about performance or safety issues with the fiber products used to strengthen tires and other industrial goods.

The affected customers were mostly in Japan but included at least one in South Korea.

Two quality control managers had led the falsification, motivated partly by pressure to meet product delivery targets. The two managers responsible for the cheating have been transferred to different positions.

Toray found the cases after an in-house survey pointed to the malpractice, prompting an internal investigation which Nikkaku said he hoped to complete by March next year.

Combined revenue of the 149 cases amounted to 150 million yen ($1.35 million) and would not have a big earnings impact, Nikkaku said.

($1 = 111.2400 yen)

(Reporting by Sam Nussey and Makiko Yamazaki; Editing by Stephen Coates)

By Sam Nussey and Makiko Yamazaki

Stocks mentioned in the article
ChangeLast1st jan.
BOEING COMPANY (THE) 0.22% 356.88 Delayed Quote.20.75%
FAST RETAILING CO LTD 0.30% 52810 End-of-day quote.15.86%
KOBE STEEL, LTD. 0.59% 1022 End-of-day quote.-3.04%
MITSUBISHI MATERIALS CORP 0.10% 2957 End-of-day quote.-27.08%
NISSAN MOTOR CO LTD 0.83% 1037 End-of-day quote.-8.23%
SUBARU CO LTD 2.27% 4735 End-of-day quote.2.71%
SUBARU CORP 1.73% 3179 End-of-day quote.-11.99%
TORAY INDUSTRIES INC 1.41% 879.6 End-of-day quote.-18.14%
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Financials (JPY)
Sales 2019 2 341 B
EBIT 2019 -
Net income 2019 104 B
Debt 2019 711 B
Yield 2019 1,79%
P/E ratio 2019 13,50
P/E ratio 2020 12,15
EV / Sales 2019 0,92x
EV / Sales 2020 0,87x
Capitalization 1 435 B
Chart TORAY INDUSTRIES INC
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Toray Industries Inc Technical Analysis Chart | 3402 | JP3621000003 | 4-Traders
Technical analysis trends TORAY INDUSTRIES INC
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Mean consensus OUTPERFORM
Number of Analysts 15
Average target price 1 112  JPY
Spread / Average Target 26%
EPS Revisions
Managers
NameTitle
Akihiro Nikkaku President, CEO, COO & Representative Director
Yuji Fukuda Director, Manager-Finance & Accounting
Tetsuya Tsunekawa Managing Director & GM-Research
Koichi Abe Representative Director & Vice President
Ryo Murayama Representative Director & Vice President
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