Toshiba chariman to resign amid forecast of Dh23bn writedown

Japanese conglomerate's woes grow as nuclear venture sours after Fukushima disaster and it now expects major loss, reversing expectations of a profit for the year.

A Toshiba logo on the company headquarters in Tokyo. The company is expected to announce its huge writedown today. Shohei Miyano / Reuters

Toshiba expects to book a ¥712.5 billion (Dh23.13bn) writedown in its nuclear power business, citing cost overruns at a US unit and diminishing prospects for its atomic-energy operations and said Shigenori Shiga will step down as the chairman of the conglomerate.

The charge will result in a provisional ¥500bn loss for the nine months through December 31, the company said on Tuesday. In December, Toshiba had warned the writedown could reach several billion dollars, triggering a share decline that has erased more than US$7bn in market value.

Toshiba’s $5.4bn acquisition of Westinghouse in 2006 was a bet on the future of nuclear power and a way to balance volatility of chip operations with steady long-term revenues. The vision has soured after the 2011 Fukushima meltdown damped demand and the company’s next-generation AP1000 modular reactor technology proved difficult to implement. Toshiba is now under pressure to come up with a plan for shoring up its balance sheet, which was already under strain from a profit-padding scandal in 2015 that led to restructuring, record losses and asset sales. Toshiba has put up for sale a significant stake in its flash memory operations and is considering other ways of raising cash.

“The questions surrounding Toshiba are so numerous, where do you even begin,” said Masahiko Ishino, an analyst at Tokai Tokyo Securities. “Investors want to know what will happen to nuclear and chip businesses, whether elevator operations and some of Toshiba’s listed subsidiaries will sold off. There is also the question of why the nuclear writedown happened in the first place.”

For the full fiscal year ending March 31, Toshiba forecast a net loss of ¥390bn, reversing its November outlook for a ¥145bn yen profit. That compares with a projected loss of ¥262.7bn, the average of analysts’ projections compiled by Bloomberg.

* Bloomberg

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