Toshiba shares fall 20% as one-off loss flagged

Kuwait Times - - BUSINESS -

Toshiba shares dived more than 20 per­cent yes­ter­day in their sec­ond straight dou­bledigit plunge, as the com­pany said it may book a one-time loss of sev­eral bil­lion dol­lars over its US nu­clear busi­ness. The stock price dropped by 20.42 per­cent to 311.60 yen, the largest fall al­lowed for a sin­gle day, about 30 min­utes af­ter the open­ing bell, as the com­pany failed to ease in­vestor wor­ries over the po­ten­tial risk. It fin­ished the ses­sion at that level.

The Tokyo-based con­glom­er­ate said Tues­day in a state­ment that costs linked to the ac­qui­si­tion last year by its US sub­sidiary of a nu­clear ser­vice com­pany would pos­si­bly amount to “sev­eral bil­lion US dol­lars, re­sult­ing in a neg­a­tive im­pact on Toshiba’s fi­nan­cial re­sults”. The ex­act fig­ure of the po­ten­tial write-down is still be­ing worked out, Toshiba pres­i­dent Satoshi Tsunakawa told re­porters af­ter the an­nounce­ment, apol­o­giz­ing for “caus­ing con­cern”.

The com­pany state­ment sug­gested the fig­ure would be re­leased soon, cit­ing an end-of-year dead­line for set­tling the val­u­a­tion of the nu­clear deal. The an­nounce­ment came af­ter Toshiba shares closed nearly 12 per­cent lower on Tues­day on me­dia re­ports about the po­ten­tial loss.

Af­ter the mar­ket closed yes­ter­day, Stan­dard & Poor’s cut two of Toshiba’s credit and debt rat­ings by one notch each in re­sponse to the com­pany’s an­nounce­ment. S&P also placed the rat­ings on watch, sug­gest­ing they could be down­graded fur­ther. An­a­lysts said un­cer­tainty was fu­elling in­vestor anx­i­ety.

“Con­cerns have yet to be cleared away as they said they didn’t know the fig­ure,” Yuk­i­hiko Shi­mada, se­nior an­a­lyst at SMBC Nikko Se­cu­ri­ties, told AFP. SMBC Nikko credit an­a­lysts Yu­taka Ban and Ken­taro Harada said in a re­port that in­vestors “can’t be op­ti­mistic about the sit­u­a­tion” even though the to­tal write-down may not end up as big as the 500 bil­lion yen ($4.3 bil­lion) re­ported by lo­cal me­dia. No­mura Se­cu­ri­ties an­a­lyst Masaya Ya­masaki said in a re­port is­sued late Tues­day that the ex­pected loss “is neg­a­tive for the com­pany as its fi­nan­cial stand­ing is frag­ile”.

Tsunakawa at the press con­fer­ence an­swered in the af­fir­ma­tive when asked if Toshiba is con­sid­er­ing boost­ing cap­i­tal. Chief fi­nan­cial of­fi­cer Masayoshi Hi­rata said that af­ter the fig­ure is con­firmed the com­pany will “ex­plain and seek sup­port” from fi­nan­cial in­sti­tu­tions. Toshiba said the pos­si­ble loss was re­lated to the val­u­a­tion of the pur­chase by sub­sidiary West­ing­house Elec­tric of the nu­clear con­struc­tion and ser­vices busi­ness of Chicago Bridge & Iron.

West­ing­house and Chicago Bridge & Iron have turned to an in­de­pen­dent ac­coun­tant to re­solve a dis­pute over dif­fer­ences in as­set val­u­a­tions, Toshiba said ear­lier this year. Toshiba said Tues­day the po­ten­tial write-down would “far ex­ceed” the $87 mil­lion first ex­pected, re­sult­ing in a “far lower as­set value than orig­i­nally de­ter­mined”. Toshiba’s lat­est full-year fore­cast is for an­nual net profit of 145 bil­lion yen ($1.24 bil­lion), up 45 per­cent from an ear­lier es­ti­mate, on sales of 5.4 tril­lion yen. But Tues­day it said it would re­lease a re­vised earn­ings fore­cast as soon as pos­si­ble to re­flect the com­ing write-down. Toshiba’s nu­clear woes are the lat­est blow to the once-proud pil­lar of cor­po­rate Ja­pan. It has been be­sieged by prob­lems, most no­tably a profit-pad­ding scan­dal in which bosses for years sys­tem­at­i­cally pushed sub­or­di­nates to cover up weak fi­nan­cial re­sults.

In an in­ten­sive over­haul, the com­pany has been shed­ding busi­nesses and an­nounced the sale of its med­i­cal de­vices unit to cam­era and of­fice equip­ment maker Canon. In­vestors had wel­comed the makeover, with Toshiba shares hav­ing climbed 77.3 per­cent this year through Mon­day. But af­ter this week’s de­clines they are only up 24.7 per­cent.

TOKYO: In this photo taken on De­cem­ber 27, 2016, a pedes­trian walks past as the Toshiba Cor­po­ra­tion logo is seen at the com­pany’s head­quar­ters.

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