Toshiba Delays Financial Report, Chairman Steps Down Over Losses in Nuclear Business

A man walks past a display of Toshiba Corp.’s products in Tokyo. AP photo

Japan Today reported today that Shigenori Shiga, the chairman of Japanese electronics and energy giant Toshiba Corp. is resigning to take responsibility for problems that will result in a 713 billion yen ($6.3 billion) loss in its nuclear business, as a result of the acquisition of CB&I Stone & Webster by Westinghouse, Toshiba’s U.S. nuclear unit. Although auditors have previously questioned the company’s reporting on the acquisition, Toshiba denies any wrongdoing. The company also said that Shiga will step down from the board but remain a Toshiba executive.

Toshiba is expected to restructure its nuclear business, but has made no forthwith announcements. Note that Japan’s entire nuclear sector was thrown into upheaval after multiple meltdowns of reactors at a power plant in Fukushima prefecture triggered by the March 2011 earthquake and tsunami.

As we reported last week, Toshiba may be considering selling its Toshiba Tec group, which makes printers and copier/MFPs, in order to repair its balance sheet. Toshiba Tec is a publicly traded subsidiary of Toshiba Corporation. Toshiba is said to have a 55-percent holding in Toshiba Tec, and its holding is said to be worth about 100 billion yen.

Earlier this week Toshiba delayed reporting its official financial results by one month, citing auditing problems related to the losses in its nuclear business. The news caused an 8-percent plunge of Toshiba stock in Tokyo trading but the company warned that the financials may change “by a wide margin.”

Toshiba optimistically said that it hopes to fix it everything by the end of March, even though it reported a group net loss of 500 billion yen ($4.4 billion) for its April-December in 2016, including the 712.5 billion yen hit from its U.S. nuclear business. The company is also forecasting a group net loss of 390 billion yen ($3.43 billion) for its complete fiscal year that will end on March 31, 2017, instead of the 145 billion yen profit it had anticipated, and reported that its net worth was minus 191 billion yen ($1.7 billion).

In the wake of its accounting scandal Toshiba has cut thousands of jobs and moved to sell some divisions to streamline the business. It recently sold its medical equipment division to Canon for almost $6 billion, and has also announced a basic agreement to sell a majority interest in its home appliance business to China’s Midea.

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