Data scandal sends Mitsubishi Materials stock falling 11%

Yolanda Curtis
November 24, 2017

SHARES of Mitsubishi Materials Corp fell as much as 11 per cent on Friday, the lowest since August, after the firm said its subsidiaries had falsified product data, the latest in a series of quality assurance scandals involving Japanese manufacturers.

MMC, part of the broader Mitsubishi "keiretsu", or group of companies, said up to 70 of its aerospace clients and seven of its auto industry customers may have received the improperly tested products produced by two of its subsidiaries, Mitsubishi Cable Industries and Mitsubishi Shindoh.

Markets were closed on Thursday for a national holiday.

Mitsubishi Materials' share price has taken a dive, after the company joined the club of scandal-tainted Japanese corporations.

Mitsubishi Materials said it first became aware of the "misconduct" at its divisions in February and opened an investigation in the wake of the Kobe Steel scandal.

Mitsubishi Materials has a 45 per cent stake in a copper tube venture with Kobe Steel alongside affiliate Mitsubishi Shindoh. While the units affected are relatively small, the company said it can't yet quantify the impact on its earnings.

Mitsubishi Materials plans to submit a report to the Ministry of Land, Infrastructure, Transport and Tourism, and is to hold a news conference Friday afternoon.

But he refuted suggestions he would step down or cut his salary, insisting that his duty was to identify the cause of the scandal and take preventive measures.

Mitsubishi Materials said it stopped shipping affected materials from the two units in October.

"We will make every effort to prevent this from happening again and to improve our internal controls, comply with the law and win back our customers' trust", Akira Takeuchi, Mitsubishi Materials' CEO said.

Japan's Nikkei recouped early losses and ended slightly higher on Friday as expectations that the Bank Of Japan would buy more exchange-traded funds offset drops in automakers.

No safety issues have been reported.

In September, Japan's third-largest steelmaker, Kobe Steal accepted its activities in the falsification of quality control data. Boeing Co. said it is reviewing the matter.

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