Saturday 29 April 2017

Toshiba chairman resigns after nuclear business loses billions

Satoshi Tsunakawa said the company is looking for potential partners to acquire a stake in Westinghouse (AP)
Satoshi Tsunakawa said the company is looking for potential partners to acquire a stake in Westinghouse (AP)
A man walks past a display of Toshiba products as the company said chairman Shigenori Shiga will step down from the board but will remain as an executive (AP Photo/Koji Sasahara)

Toshiba's chairman has resigned after the company logged such massive losses in its nuclear business that it must sell its lucrative computer chip business to avoid folding.

The company projected a 712.5 billion yen (£5 billion) loss for its nuclear business related to the acquisition of CB&I Stone & Webster by its US nuclear unit Westinghouse.

The company also said it will not take on new projects to construct nuclear plants.

President Satoshi Tsunakawa said the company is also looking for potential partners to acquire a stake in Westinghouse.

He bowed deeply at a news conference to apologise for "troubling investors and stakeholders".

Toshiba had earlier delayed reporting its official financial results by a month, citing auditing problems, sending its shares tumbling 8% in Tokyo trading.

After the market closed, it released unaudited numbers, warning they may change "by a wide margin".

The company said chairman Shigenori Shiga will step down from the board, effective on Wednesday, but stay on as an executive.

Toshiba said its net worth was at minus 191 billion yen (minus £1.3 billion) by the end of last year. The company hopes to fix that by the end of March by selling its flash-memory business and other assets.

Mr Tsunakawa told reporters the company viewed its move into the nuclear sector by acquiring Westinghouse in 2006 as a misstep that led to its present problems.

Westinghouse's purchase in 2015 of CB&I Stone & Webster, a nuclear construction and services business, was aimed at winning more business in decontamination, decommissioning and plant projects, but it just amplified that problem.

Auditors questioned Toshiba's latest reporting on the acquisition of CB&I Stone & Webster after a whistleblower, an employee at Westinghouse, wrote a letter to the Westinghouse president.

The company said it will reorganise its nuclear business to be directly under Mr Tsunakawa for stricter monitoring.

It will also focus on reactor maintenance, the nuclear fuel business and decommissioning of the Fukushima nuclear plant, where reactors went into multiple meltdowns after the March 2011 earthquake and tsunami.

Efficiency moves expected at CB&I Stone & Webster never played out, resulting in a huge over-valuation of the company's worth that led to the huge losses. Toshiba denied it had deliberately covered up the problems.

In its preliminary results, Toshiba said it anticipates a group net loss of 500 billion yen (£3.5 billion) for April-December last year, including the 712.5 billion yen hit from its nuclear business.

The company is forecasting a group net loss of 390 billion yen (£2.75 billion) for the year to March 31, instead of the 145 billion yen (£1.2 billion) profit it had anticipated earlier.

Toshiba, founded in 1875, employs about 190,000 people and used to be one of the most respected brands in Japan. It still has a sprawling business spanning household appliances, railways, hydrogen energy and elevator systems.

The company has been grappling in recent years with a scandal over company officials' doctoring of accounting books to meet unrealistic profit targets.

AP

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