Toshiba warns of ¥1 trillion loss for FY2016

11 April 2017

Toshiba Corp has reported a loss of ¥532 billion ($4.8 billion) for the first nine months of its 2016 financial year (April to December), up from a ¥479.4 billion loss recorded in the same period of FY2015. The nine-month financial results - which the firm's auditors, PricewaterhouseCoopers Aarata LLC, have refused to sign off - have already been delayed twice and raise the possibility that Toshiba could be delisted from the Tokyo Stock Exchange.

Toshiba's US subsidiary Westinghouse Electric Company filed for Chapter 11 bankruptcy on 29 March to protect it from creditors while it undergoes restructuring. Masayoshi Hirata, the Japanese electronics company's chief financial officer, said today the filing "may cause additional deterioration" of ¥620 billion in the full-year results, meaning a net loss for the full year of about ¥1 trillion.

"There are material events and conditions that raise substantial doubt about the company's ability to continue as a going concern," Toshiba said today.

Toshiba, which bought Westinghouse in 2006, warned in December last year that it might have to write off "several billion" dollars because of Westinghouse's purchase in 2015 of US construction firm CB&I Stone & Webster (S&W). Upon closing of that transaction, Westinghouse assumed full responsibility for all AP1000 projects and the nuclear integrated services business. Since then, Toshiba and CB&I - S&W's former parent company - have been in dispute over the business's true value.

Westinghouse is constructing eight AP1000 pressurized water reactors - four in the USA (two each at Vogtle and Summer) and four in China (two each at Sanmen and Haiyang) - with S&W as its consortium partner. Both Toshiba and Westinghouse have stressed that the filing affects nuclear power projects in the USA only.

Toshiba said today that its audit committee had "found no specific evidence of any need to recognise an additional impairment loss in any accounting period prior to the third quarter of FY2016 in respect of the acquisition of Stone & Webster." It added: "PwC Aarata has indicated that it cannot finalise its evaluation of the committee's conclusion and, as a result, they were not able to determine whether there is a need for correction. However, Toshiba recognises that any further delay in submitting the FY2016 third quarter security report and disclosing corporate information will bring greater disadvantages to its stakeholders, and has decided to submit the third quarter security report."

Excluding its overseas nuclear power business, which "generated a huge loss", almost all its business segments have reported "fairly healthy operations", Toshiba said.

Westinghouse and its group companies are now deconsolidated from Toshiba Group, which Toshiba said is in line with its policy of eliminating risk related to its overseas nuclear power business unit. Toshiba also said it had taken measures to improve its financial condition, including the sale of assets worth about ¥160 billion in FY2016.

As a result of extending the closing of its third-quarter business results, Toshiba said "some time will be required" to compile the final earnings report for FY2016, which it nevertheless intends to announce in mid-May.

Westinghouse's shares are split between Toshiba (87%), KazAtomProm (10%) and IHI Corporation (3%). KazAtomProm, Kazakhstan's state-run uranium producer, is entitled to sell its 10% equity holding in Westinghouse pursuant to put option agreements that can be exercised on or after 1 October, Toshiba has said.

Researched and written
by World Nuclear News