Toshiba chairman to step down after nuclear business loss

Tracy FergusonFeb 16, 2017

Toshiba's chairman is stepping down after the Japanese company reported a $6.3 billion writedown at its troubled USA nuclear business.

The chairman of Toshiba has resigned following the release of figures showing a projected $6.3bn loss from the company's nuclear business - a loss that may continue to grow and threaten its other businesses.

The bombshell announcements capped a manic day during which the company's stock plunged as much as 10% after it missed its own deadline to report earnings.

Toshiba is expected to restructure its ailing nuclear business, but nothing has been announced.

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Masayuki Kubota, chief strategist at Rakuten Securities, said that if the company continued to unload its most profitable businesses while keeping problem units, "it is impossible to have hope about Toshiba's future". Internal reports suggested governance problems at nuclear unit Westinghouse Electric related to the ill-fated acquisition, requiring an investigation that could affect nine-month earnings, the company said.

Shares in Toshiba fell 8.01% to 229.80p at close.

Toshiba now says that Westinghouse overpaid for the company and that information material to the acquisition - specifically cost overruns, delays, and the impact both would have on CB&I Stone & Webster's bottom line - were not disclosed properly or accounted for.

A source briefed on the matter said Toshiba had not been able to immediately secure the approval of its auditor, PricewaterhouseCoopers Aarata.

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Toshiba was reported by New York Times as saying that the firm is considering to sell stake in Westinghouse. Equity to shareholders of the company is estimated to be a loss of 191.2 billion yen. Toshiba's construction of plants in China also has been delayed.

When the company announced in December it had to announce a one-off loss relating to its nuclear arm, the shares lost about 45 per cent of their value.

Construction of the new reactors is expected to create thousands of jobs over the next decade, with many contracts expected to go to United Kingdom firms.

Up until now Toshiba has said it was looking to sell no more than 19.9 percent of its chip business for about $3.6 billion although this has produced a tepid response from potential buyers (see Few firms show interest in Toshiba's chip business ).

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The company is also forecasting a group net loss of 390bn yen (£2.74bn) for the full year to March 31, instead of the 145bn yen (£1bn) profit it had anticipated earlier.

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