ReutersTOKYO (Reuters) — Investors looked set to bail out of Kobe Steel Ltd. on Tuesday, after Japan’s third-biggest steelmaker revealed it had fabricated data to show its products met customer specifications in the latest scandal to rock corporate Japan.
Kobe Steel said on Sunday that about 4 percent of the aluminum and copper products that it shipped from September 2016 to August 2017 were falsely labeled as meeting the specifications requested by customers.
The misconduct involved dozens of staff and possibly stretched back 10 years, the company said.
The admission from the steel and aluminum maker follows similar scandals at Japanese companies including Nissan Motor, Mitsubishi Motors and Takata Corp. Toshiba Corp. is still battling the fallout of a scandal involving reporting inflated profits.
“The impact on financials is unclear, but could be substantial depending on request[s] for replacement/recall,” Jefferies analyst Thanh Ha Pham said in a note. “Handling the situation is key to avoid long-term reputation damage.”
UACJ, Japan’s biggest aluminum maker, may be a beneficiary of the scandal, he said. UACJ shares were up 3 percent around noon.
Shares of Kobe Steel, on the other hand, looked set to plunge as sell orders outpaced bids by a factor of roughly 20 to one in early trade. On Friday, the shares rose 2 percent to ¥1,368.
Products with falsified data were shipped to about 200 companies, the company said at the weekend.
Aluminum castings, forgings and flat-rolled items, along with copper strips and tubes were among the products affected, the company said in a statement said.
Companies including Toyota Motor Corp., Central Japan Railway, Mitsubishi Heavy Industries, Mazda Motor Corp. and Subaru Corp. were among those using products covered by the admission from Kobe Steel, according to media reports and statements.
Japan’s transport ministry has called for automakers to make safety checks of components from Kobe.
A Kobe spokesman told Reuters the firm is working with customers to check for any issues. “To our knowledge it has not affected any customer’s products at this stage,” he said.
Toyota called the revelations a “grave issue,” and as with most of the other Kobe Steel customers, said it was making checks on where the components were used and what effect they have on products using them.
Mitsubishi Heavy said Kobe Steel products were used on its Mitsubishi Regional Jet and rockets, including a H-2A rocket launched on Tuesday to put a navigation satellite into orbit. There were no technical problems with the components, MHI said.
Kobe Steel has said the impact of the data falsification on its earnings is still unknown. An official from the metals division of Japan’s industry ministry was to hold a press conference on Tuesday afternoon.