Toshiba swings to loss in Q1

TOKYO: Toshiba Corp swung to a firstquarter loss on weak PC and TV sales, raising pressure on its new president to speed up a business revamp in addition to improving governance after a $1.3 billion accounting scandal.

The laptops-to-nuclear power conglomerate reported an April-June operating loss of 10.96 billion yen ($91 million) yesterday compared with a 47.7 billion profit a year earlier.

Toshiba confirmed last week it had overstated profits going back to fiscal 2008/09 by 155 billion yen. It also reported a 37.8 billion yen net loss for the last financial year through March to reflect more costs and conservative estimates on operations, including the South Texas Project, a US power plant project.

An accounting probe found in July that Toshiba suffered from dysfunctions in governance, with employees discouraged from challenging unrealistically high targets set by superiors.

Previous president Hisao Tanaka and several other board members stepped down amid the scandal, and the company has promised to improve its governance by bringing in more outside directors.

New president Masashi Muromachi said yesterday he was also considering an overhaul of its weaker operations.

“I’m currently considering various options for structural reforms that will be both drastic and without limitations,” he told a news conference, adding that he aimed to announce some details in late October or early November.

Analysts expect big cost cuts in weaker operations such as PCs and TVs.

The quarterly results showed revenue fell 5% from a year earlier to 1.35 trillion yen. Net PC sales fell 31% to 116.8 billion yen while TV sales roughly halved to 21.8 billion yen, it said.

Toshiba’s nuclear business also struggled, and its energy and infrastructure unit recorded an operating loss of 10.7 billion yen compared with a profit of 10 billion a year earlier.

With the announcement, Toshiba has finally caught up with its regular financial disclosures. It had twice postponed its fullyear results due to the accounting investigation, raising fears the company could be delisted from the Tokyo bourse.

The bourse said yesterday it placed Toshiba shares on a watch list and fined the company 91.2 million yen for betraying investors’ trust.

Financial regulators are widely expected to impose a separate and more serious fine.

Toshiba shares fell 2.1% to 314.80 yen ahead of the announcement.