TOSHIBA SHEDS MORE AS­SETS, CUTS JOBS TO RE­GAIN IN­VESTOR TRUST

Financial Chronicle - - MISCELLANY - MAKIKO YAMAZAKI

Toshiba Corp an­nounced on Thurs­day it is shed­ding as­sets, cut­ting jobs and buy­ing back its stock start­ing this week, send­ing its shares up 13 per cent, as the once-mighty Ja­panese con­glom­er­ate aims to re­gain in­vestor con­fi­dence.

The com­pany an­nounced it is liq­ui­dat­ing its British nu­clear power unit and sell­ing its US liq­ue­fied nat­u­ral gas (LNG) busi­ness to China’s ENN Group as part of a new five-year busi­ness strat­egy, which also in­cludes 7,000 job cuts, or 5 per cent of its work­force, over five years.

Toshiba’s shares surged 12.7 per­cent to close near two-year highs af­ter the an­nounce­ment, helped also by a much-an­tic­i­pated move to re­pur­chase up to 40 per cent of its own shares start­ing Fri­day.

The 143-year-old com­pany has been try­ing to win back the mar­ket’s trust af­ter a 2015 ac­count­ing scan­dal un­cov­ered wide­spread ir­reg­u­lar­i­ties at the lap­tops-tonu­clear con­glom­er­ate for years.

The scan­dal forced it to recog­nise huge cost over­runs at now-bank­rupt US nu­clear unit West­ing­house, prompt­ing it to sell its prized me­mory chip unit ear­lier this year to a con­sor­tium led by US pri­vate eq­uity firm Bain Cap­i­tal and leav­ing it with few growth busi­nesses.

“There had been re­ports about a pos­si­bil­ity of sell­ing non-per­form­ing busi­ness and job cuts so such moves had been ex­pected at some point. But in­vestors are tak­ing heart,” said Hiroyuki Fuku­naga, chief ex­ec­u­tive of In­vestrust, a fi­nan­cial ad­vice firm. “The share buy­back an­nounce­ment worth up to 40 per­cent of out­stand­ing shares is def­i­nitely pos­i­tive, too.”

Toshiba had al­ready promised a share buy­back of 700 bil­lion yen ear­lier this year, but the tim­ing had been un­de­cided. Its an­nounce­ment on Thurs­day ap­peared to out­weigh a weaker profit fore­cast -- the com­pany said it now ex­pects a full-year op­er­at­ing profit of 60 bil­lion yen rather than a pre­vi­ous es­ti­mate of 70 bil­lion yen.

Toshiba had been try­ing to shed the trou­bled as­sets that could have ex­posed the Ja­panese com­pany to fu­ture losses.

The de­ci­sion to liq­ui­date NuGen, how­ever, would be a blow to Bri­tain’s plans to build a nu­clear plant that was meant to pro­vide 7 per­cent of the coun­try’s elec­tric­ity. NuGen said 18 months of ne­go­ti­a­tions with a range of po­ten­tial own­ers had failed to yield any deal, and that it was now up to the British govern­ment and the Nu­clear De­com­mis­sion­ing Au­thor­ity to de­ter­mine the fu­ture of the Moor­side site in Cum­bria. South Korea’s state-run Korea Elec­tric Power Corp (KEPCO) had been in talks with Toshiba to buy a stake in NuGen. South Korea’s en­ergy min­istry said on Thurs­day it will co­or­di­nate with the British govern­ment and mon­i­tor the liq­ui­da­tion process with KEPCO.

Toshiba had al­ready promised a share buy­back of 700 bil­lion yen ear­lier this year, but the tim­ing had been un­de­cided

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