2 minute read
9 Nov 2017
11:38 am

Japan’s struggling Toshiba logs $436 mn loss in first half


Troubled Japanese conglomerate Toshiba said Thursday it logged a net loss of $436 million for the fiscal first half, as it moves to complete the multi-billion-dollar sale of its chip business to restore its balance sheet.

The Tokyo-based firm said the loss was mainly due to the tax impact associated with the controversial deal to sell the chip unit to a consortium led by Bain Capital.

The announcement came after the company said last month it was able to account for tax expenses associated with the chip unit sale, but not the massive proceeds from it.

The result of this was that Toshiba projected an annual net loss of 110 billion yen ($970 million).

But the company has previously said the sale of the prized business should eventually boost the firm’s before-tax consolidated income by about 1.08 trillion yen.

Sales over the six-month period came in at 2.39 trillion yen, a 5.1-percent rise from the same period a year ago.

But the robust profits at the chip unit helped bring the firm’s six-month operating profit to a record 231.8 billion yen, more than double the same period last year.

Over the full year, Toshiba said it was projecting sales of 4.97 trillion yen, as well as a record operating profit of 430 billion yen.

After the announcement, Toshiba shares dropped 2.49 percent to 313 yen after spending most of the day hovering near the previous day’s close.

In its earnings statement, Toshiba also continued to warn the market about its “ability to continue as a going concern,” following the disastrous acquisition of US nuclear energy firm Westinghouse, which racked up billions of dollars in losses before being placed in bankruptcy protection.

Those losses came to light as the group was still reeling from revelations that top executives had pressured underlings to cover up weak results for years after the 2008 global financial meltdown.

After months of wrangling with competing bidders, Toshiba said in September that it formally signed an agreement to sell the chip unit for 2 trillion yen to a consortium led by US investor Bain Capital, which included US tech giants Apple and Dell as well as South Korean chipmaker SK Hynix.

The chip unit brought in around a quarter of Toshiba’s total annual revenue and is the crown jewel in a vast range of businesses ranging from home appliances to nuclear reactors.