Toshiba on Thursday met a looming deadline to report its long-delayed financial results, saying it lost around $8.8 billion in the last fiscal year over its hard-hit US nuclear unit Westinghouse Electric.
Toshiba dodged a delisting from Japan’s premier stock exchange as it posted long-delayed financial results Thursday, but it lost some $8.8 billion in its last fiscal year over a sea of red ink at its US nuclear unit Westinghouse Electric.
The troubled conglomerate still faces a court battle to sell off its prized memory chip business for around $18 billion with the sale seen as crucial to helping the firm get back on its feet.
There had been growing worries that cash-strapped Toshiba may not make Thursday’s deadline to supply financial statements for the fiscal year ended in March, as it was at odds with its auditor over multi-billion dollar losses at Westinghouse.
Toshiba had repeatedly delayed the release of its financial statements, saying it needed more time to gauge the impact to its balance sheet.
The massive losses at the division — largely owing to delays and cost overruns — have raised doubts about the future of Toshiba, which is still recovering from a 2015 accounting scandal.
The firm is also probing whistleblower claims of financial misconduct by senior managers at Westinghouse.
However, auditor PricewaterhouseCoopers Aarata issued a qualified opinion on Toshiba’s statements Thursday, saying they were “mostly appropriate”, although the two sides disagreed over when some of the losses should be booked.
Toshiba said it had a net loss of 965.7 billion yen ($8.8 billion) for the fiscal year ended March 31 but added that it would swing back to profitability in the current fiscal year, largely owing to a strong performance in the chip division.
“With this, we believe our company’s earnings reporting has been normalised,” Toshiba CEO Satoshi Tsunakawa told a press briefing Thursday.
The firm’s shares have already been demoted from the prestigious first section of the Tokyo Stock Exchange over inadequate internal controls.
They closed at 292 yen Thursday in Tokyo, up 0.68 percent.
‘Just the beginning’
Toshiba still needs to get itself out of negative net worth — its liabilities exceed its assets — by March 2018 to avoid being delisted from the Tokyo Stock Exchange.
“Toshiba has made one positive step forward to avoid the imminent risk of being delisted,” said Makoto Sengoku, a market analyst at Tokai Tokyo Research Center.
“But this is nothing more than the beginning” of its restructuring.
In June, Toshiba said it was talks over the chip unit sale with public-private Innovation Network Corp of Japan, state-backed Development Bank of Japan and US private equity fund Bain Capital, with South Korean chipmaker SK Hynix acting as a lender.
Taiwan’s Hon Hai, better known as Foxconn, has also expressed its interest.
But US-based Western Digital, which jointly operates a chip factory in Japan with Toshiba, launched a court bid to block the sale.
Toshiba is the world’s number-two supplier of memory chips, behind South Korea’s Samsung, and the profitable division has accounted for about one-quarter of the Japanese firm’s total annual revenue.
The sale involving state-backed buyers would mean the Japanese government would effectively own the chip division.
Japan had concerns about losing a sensitive technology amid questions about security around systems already using Toshiba’s memory chips, which are also widely used in data centres.
Even before the problems at Westinghouse, Toshiba’s reputation was badly damaged over separate revelations that top company executives had pressured underlings to cover up weak results for years after the 2008 global financial meltdown.
Toshiba — which has more than 180,000 employees globally — once touted its overseas nuclear business as a future growth driver, filling a hole left after the 2011 Fukushima crisis slammed the brakes on new atomic projects in Japan.
But delays and cost overruns hit Westinghouse’s finances hard as the global outlook for the nuclear business weakened.