Tokyo - Toshiba says it expects to book a 712.5 billion
yen ($6.3 billion) writedown in its nuclear power business, citing cost
overruns at a US unit and diminishing prospects for its atomic-energy
operations. Shigenori Shiga will step down as chairman of the conglomerate.
The charge will result in a provisional 500 billion
yen loss for the nine months through December 31, the company said in a
statement Tuesday. In December, Toshiba had warned the writedown could
reach several billion dollars, triggering a share decline that has erased more
than $7 billion in market value. As a result of the losses, shareholder equity
will drop to negative 150 billion yen for the current year ending in March,
Toshiba forecast.
The earnings results came after a chaotic afternoon,
which began when the company missed its own deadline for announcing earnings.
That raised questions over whether the Japanese company has control over
its finances, and the shares fell to near 38-week lows.
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 be
sold off. There is also the question of why the nuclear writedown happened in
the first place.”
Read also: Toshiba fears larger than expected losses
In a sign of how bad things are, Toshiba said it is
considering selling a majority stake in its memory chip business. The company
has previously planned to limit the sale to 20 percent to maintain control.
Toshiba has said it will separate the chip unit by the end of March and hold a
shareholders’ meeting that month. Strategic investors and foreign private
equity funds are among the potential bidders, according to people with
knowledge of the matter.
NAND flash memory, used in smartphones and solid state
disk drives, is one of the few bright spots in Toshiba’s sprawling portfolio,
which also includes personal computers, TVs, railway systems and elevators.
Memory chips generated 50.1 billion yen in profit in fiscal first half,
accounting for more than half of total operating income profit in the period.
The company didn’t disclose earnings for the division in the most recent
quarter.
Toshiba’s $5.4 billion 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.
For the full fiscal year ending March 31, Toshiba
forecast a net loss of 390 billion yen, reversing its November outlook for a
145 billion yen profit. That compares with a projected loss of 262.7 billion
yen, the average of analysts’ projections compiled by Bloomberg.