Toshiba seen taking $850m hit on US nuclear business
Dispute over subsidiary valuation could erase company's projected profit
TOKYO -- Toshiba is expected to report a roughly 100 billion yen ($854 million) extraordinary loss on its U.S. nuclear power operations, it was learned on Monday, continuing a string of bad news in what the Japanese company considers a core business.
The loss relates to subsidiary Westinghouse Electric's acquisition of an American nuclear power services business last year. Westinghouse and seller Chicago Bridge & Iron have turned to an independent accountant to resolve a dispute over a difference of around $2.6 billion in asset valuation.
Toshiba's loss could exceed 100 billion yen depending on the result of the valuation process. The company currently projects group net profit of 145 billion yen for the fiscal year ending in March. Toshiba upgraded its earnings forecast three times on a strong showing by the company's mainstay memory chip business.
On Tuesday, Toshiba admitted to the possibility of the loss and said the company would make public any information that needs to be disclosed. At the start of trading on the Tokyo Stock Exchange that day, Toshiba's shares declined 72 yen, to 371 yen, down 16% from the previous trading day.
Toshiba was designated a "security on alert" by the Tokyo Stock Exchange in the wake of an accounting scandal last year. The company said on Dec. 19 the bourse extended its designation, citing the need for further improvement in Toshiba's internal management systems.
Toshiba booked roughly 250 billion yen in impairment losses in its nuclear power systems business last fiscal year, stemming mainly from Westinghouse. A spinoff of the operations has been suggested.