Toshiba braces for massive losses following accounting scandal

The Japanese electronics company Toshiba is bracing for huge losses as it counts the cost of an accounting scandal.

The firm is expected to announce an operating loss of 90 billion yen ($US740m) for the six months through to September, according to a report in the Nikkei business daily.

The losses are Toshiba’s first for six years and compare with a 137.8bn yen profit in the same period last year.

The Nikkei report sent Toshiba shares down by as much as 5.9% on Thursday morning to their lowest level in almost a month, before recovering slightly to 330.5 yen, down 3.6%, midway through the day.

The paper, quoting anonymous sources, said the scandal had frustrated Toshiba’s attempts to boost sluggish sales of consumer electronics. The 140-year-old company’s product range includes TVs, computers, as well as rice cookers and other kitchen appliances. It also has a stake in the nuclear power industry.

The company incurred huge losses in its home appliances unit and its point of sale equipment business, according to Japanese media reports, although its semiconductor business is expected to make a profit.

Toshiba confirmed it would suffer a half-year operating loss, but would not provide figures. It has already said it will register a 37.8 billion yen net loss for the fiscal year to March 2015.

Toshiba’s chief executive, Hisao Tanaka, and seven top executives were forced to resign in July after it was revealed the firm overstated profits over several years by almost 152 billion yen – about three times the firm’s initial estimate.

In one of the most damaging corporate scandals in Japan in recent years, regulators said managers had started setting unrealistic performance targets for the firm’s new businesses, such as smart meters and electronic toll booths, after the global financial crisis seven years ago. The accounting irregularities continued after the March 2011 Fukushima disaster, amid concerns Toshiba would sustain losses in its nuclear division.

In their report into the scandal, investigators said: “Within Toshiba, there was a corporate culture in which one could not go against the wishes of superiors.”

Unusually, Toshiba won’t release its first-half results until Saturday, as many of its new board members have been appointed from outside and can only attend meetings at weekends.

The scandal has forced Toshiba, which employs more than 200,000 people worldwide, to embark on a round of restructuring that includes selling its shares in affiliates. The firm has said it will sell its image sensor business to Sony and is expected to announce an overhaul of its home appliance, TV and computer units later this month.

Japan’s government is struggling to regain the confidence of global investors after two major scandals in the past four years. In late 2011, Olympus was found to have covered up 1.7 billion US dollars in losses over 13 years.

Powered by article was written by Justin McCurry in Tokyo, for on Thursday 5th November 2015 06.11 Europe/ © Guardian News and Media Limited 2010


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