Toshiba shares fall 16% after nuclear business loss reports

Toshiba has recently reported an estimated loss of around ¥100 billion ($854 million) coming from its subsidiary Westinghouse Electric’s acquired American nuclear power services.

Following the news of Toshiba’s projected loss; the company’s shares fell to almost 16% from the previous day, trading on Tuesday at ¥72, to ¥371 on the Tokyo Stock Exchange. On the Tuesday close, Toshiba shares traded 12% lower.

Westinghouse Electric purchased a nuclear service company from Chicago Bridge & Iron last December 2015 for $229 million. According to Nikkei, the loss can be rooted back to this particular acquisition of the company.

Westinghouse and CB&I have resorted to an independent accountant in order to resolve the accounting dispute between the two revolving over a difference in asset valuation.

Toshiba said in a statement, “Currently we are studying a loss of some 100 billion yen… linked to the purchase.”

The estimated full-year net profit of the company is about ¥145 billion for the latest financial year, which is a huge difference from its ¥460 billion loss. The forecast was actually 45% higher than the company’s initial estimate, with the recorded sales reaching ¥5.4 trillion.

The loss experienced by Toshiba was partly due to a strong demand for flash memory chip coming from the Chinese market.

The impairment losses booked by Toshiba reached around ¥250 billion on its nuclear power systems business last fiscal year, all coming mostly from the Westinghouse subsidiary.

The Tokyo Stock Exchange has issued Toshiba a ‘security on alert’ from the company’s 2015 accounting scandal. According to the Japanese company, they have extended their designation, since they need more time to further improve the company’s internal management systems.

The Japanese company has lost its reputation on December last year, when they have been involved in a profit-padding scheme, where the heads of the company has reportedly been systematically pushing their inferiors to cover up the company’s weak financial outcomes, as a result, Toshiba further lost its reputation instead of garner more.

Toshiba CEO Satoshi Tsunakawa has placed nuclear and semiconductors as the focus of the company for further growth, while trying to tone down their market presence in the consumer electronics business such as personal computers and TVs. Tsunakawa has promised that he will prioritize boosting the company’s capital base and to rebuild trust that the company has lost. Tsunakawa took over as Toshiba CEO last June 2016.

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