Beset by a massive recall scandal Takata cut its outlook for the full year, but shares bounced on Friday, suggesting that investors believe Japan's biggest airbag maker will survive the crisis.
"Takata's operating profit remains solid," said Advanced Research auto analyst Koji Endo. "Even if recall-related costs continue to rise, it is unlikely to go bankrupt."
Takata logged a special loss of 32.5 billion yen ($277 million) in the nine months to the end of December 2014, after taking a special charge of 53.1 billion to cover the cost of the recalls. It also warned that its full-year loss will be 31 billion yen, larger than the previously forecast 25 billion, but in line with analysts' forecasts.
However, operating profit grew 8.9 percent on year to 23.4 billion yen, thanks to a weaker yen and stronger performance in all its major markets except Europe. Sales rose 15.6 percent to 469.9 billion yen.
"The core business remained firm, there were no major changes in the recall situation, which investors are focusing most closely on and which remains ongoing," said Credit Suisse analyst Masahiro Akita in a note.
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Shares rose 4 percent on Friday but are down 52 percent from a year ago.
Unknown consequences
Takata has forced automakers around the world to recall nearly 25 million vehicles since 2008, according to Reuters' calculations, due to a defect with its airbag inflators that can cause them to explode too forcefully, spraying metal fragments inside the vehicle. So far, the overall fallout from the recall remains unknown, analysts say, making it hard to quantify.
"If these investigative recalls result in the recognition of a defect in Takata's products, there is a possibility the company will incur a certain percentage of the costs of these investigative recalls," the firm said in its quarterly earnings statement.
"There's not much Takata can do, pending the results," of the investigations, said Advanced Research's Endo.
For now, carmakers are taking the recall-related losses, but their patience may be running out. Last week, Honda Motor's operating profit was squeezed by a 50 billion yen charge to cover the cost of Takata recalls.
"Key customers are starting to look at permanently reducing their business with Takata", said CLSA auto sector analyst Christopher Richter.
Biggest risk lurking ahead
The biggest clouds hanging over Takata, however, are the pending class action suits in the U.S., analysts said.
It may be impossible to put a figure to the potential cost of losing the lawsuits in the U.S., said Advanced Research's Endo, but a combination of the costs related to the recalls, as well as the lawsuits, could cause losses to balloon over the next few years, he said.
But Takata is still Japan's largest air bag maker. It supplies airbags for around half of Honda's vehicles, according to Endo.
"Many companies in the car industry would have a supply chain problem if Takata were allowed to go bust," he said.
- By CNBC's Mia Tahara-Stubbs