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Business

Huge net loss, job cuts on the way

TOKYO -- Fresh from a mammoth accounting scandal, Toshiba will likely post a group net loss of more than 500 billion yen ($4.04 billion) for the fiscal year through this coming March. This is the largest pool of red ink in Toshiba's history, even more than the 398.8 billion-yen defeat the conglomerate suffered in fiscal 2008, at the height of the global financial crisis.     

Toshiba has some drastic restructuring to do, mainly with its TV and home appliances division.

     For fiscal 2014, which ended this past March, Toshiba posted a 37.8 billion-yen loss.

     The electronics giant has some drastic restructuring to do, mainly with its TV and home appliances division.

     Toshiba has been able to delay the pain of structural reform for years, instead hiding losses in the pages of some creative bookkeeping. Toshiba is now trying to solve a raft of fundamental problems and hopes to be on an upward trajectory as early as fiscal 2016.

     It has already decided to sell its image sensor manufacturing plant to rival Sony. It also plans to cut jobs in its TV and home appliances division. Severance pay and expenses related to other restructuring measures are contributing to the current fiscal year's colossal loss.

     The company reported a 37.2 billion-yen profit for the April-September half but has not disclosed a forecast for the entire year.

     Toshiba on Monday is to unveil the annual projection together with details of the job-cut program.

     The net loss will be the fourth suffered by the group since fiscal 2008.

     Toshiba has been furiously correcting previous financial results, a process that has revealed once-hidden losses of almost 200 billion yen. 

     The job-cut program could end up costing Toshiba around 200 billion yen as the company shells out for severance packages and relocation costs.

     The group operating loss will be more than 200 billion yen, a complete flip-flop from the 170.4 billion yen group operating profit for fiscal 2014. This is partly due to a struggling flash-memory division that finds itself in an industry with increasingly less pricing power.

      There's more. Toshiba will have to write off deferred tax assets that have been booked based on optimism-infused forecasts of future profits. This will increase Toshiba's tax expenses and boost its net losses.

     Impairment losses from reduced goodwill of acquired businesses, including Westinghouse, the U.S.-based nuclear power plant engineering company, are not reflected in the figure.

(Nikkei)

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