BackToshiba takes $2.3 billion writedown on US nuclear unit Westinghouse
The 260 billion yen writedown is a reversal of Toshiba's long-time refusal to mark down the 330 billion yen goodwill value of Westinghouse
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Tokyo: Japan’s Toshiba Corp said on Tuesday that it booked an impairment charge of $2.3 billion for the past financial year on US nuclear unit Westinghouse, a much-anticipated move to address lingering doubts over its book-keeping.
The 260 billion yen writedown is a reversal of Toshiba’s long-time refusal to mark down the 330 billion yen goodwill value of Westinghouse despite a deterioration in the nuclear business since the 2011 Fukushima disaster. Toshiba bought Westinghouse in 2006 for $5.4 billion.
Investors have said that concerns over the value of the business have been a major reason behind the lack of recovery in Toshiba’s share price following a $1.3 billion accounting scandal last year.
The shares closed at 241.9 yen on Tuesday, still worth less than half of their value before the company first disclosed cases of accounting irregularities around a year ago.
The laptops-to-nuclear conglomerate said the reversal was prompted by its weaker debt-financing abilities for nuclear projects after the scandal led to a business overhaul and a slew of credit-rating downgrades.
Chief executive Masashi Muromachi, however, dismissed suggestions that the nuclear division was in trouble. Many countries have frozen nuclear energy expansion plans in recent years, especially in the aftermath of the Fukushima disaster.
“Regardless of the writedown, the nuclear business is progressing as planned," he said at a press conference.
Despite the Westinghouse charge, Toshiba raised its earnings estimates for the year ended in March as it booked a pretax profit of 590 billion yen from the sale of a medical equipment division to Canon Inc. using an unusual method to get cash before the deal gained regulatory approval..
It now forecasts a net loss of 470 billion yen, smaller than a 710 billion yen loss estimated earlier. The company will release its results on 12 May.
Toshiba is also in final talks to replace Muromachi in June. Muromachi took over the company last July after his predecessor and a slew of other top executives resigned for their roles in the scandal.
“The nomination committee is currently discussing the CEO selection," Muromachi said at the press conference. “It will make a final decision probably after the Golden Week holiday (that ends early May)."
A source has told Reuters that senior executive vice president Satoshi Tsunakawa was a leading candidate, noting that he was not embroiled in the scandal.
Tsunakawa is credited for having increased earnings at the medical equipment unit. Reuters
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