Toshiba chairman resigns

24 February 2017

Toshiba chairman Shigenori Shiga has resigned, following the announcement, on 14 February, that the struggling Japanese engineering and electrical giant would suffer a multi-billion dollar loss during the year to March 2017.
Earlier in the year Toshiba had delayed issuing its results, but eventually announced that it was set to report a net loss of 390bn yen ($3.4bn) in the current financial year.
The company said it expected to take a 712.5 billion yen ($6.3bn, £5bn) writedown at its US nuclear business. Shares fell by as much as 9% on the day. They have lost about 50% since late December, when Toshiba first warned about the extent of its problems.
The losses are linked to a deal done by its US subsidiary, Westinghouse Electric, when it bought a nuclear construction and services business from Chicago Bridge & Iron in 2015. Assets that it took on are likely to be worth less than initially thought. There is also a dispute about payments that are due.
Toshiba had already announced plans to sell off part of its profitable memory chip business to raise funds. It is the second largest chip maker in the world, behind Samsung. The company is still struggling to recover after it emerged in 2015 that profits had been overstated for seven years, prompting the chief executive to resign.
Toshiba has a 60% stake in NuGen, a joint venture with France's Engie, which has the contract to build a new nuclear power plant, Moorside, in Cumbria in the UK.
It had already become widely known, owing to reports in The Japan Times, that Toshiba was considering selling its US subsidiary Westinghouse Electric Co. as one of the options in an ongoing review of its overseas nuclear operations. Toshiba is expected to suffer a loss of up to ¥680 billion from its US nuclear plant business. Against this background, Toshiba aims to eliminate the risks of further losses in the future by selling Westinghouse or lowering its equity stake in the unit.
At a news conference on 27 January, Toshiba president Satoshi Tsunakawa unveiled a plan to review his company’s nuclear operations abroad.
As it appears difficult for Toshiba to find a buyer of Westinghouse, which is currently suffering heavy losses, the parent company is considering various other options, including selling some of the unit’s profitable segments, such as its nuclear fuel business.
Toshiba bought Westinghouse in 2006 from BNFL, a British government owned company, for  ¥490 billion ($6 billion) on the back of strong global demand for nuclear power plants.  Westinghouse is currently constructing four nuclear reactors in the United States and four more in China.

 



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