February 14, 2018 12:36 pm JST  (Updated February 14, 2018 3:11 pm JST)

Toshiba appoints ex-banker as CEO, expects first profit in 4 years

Forecast of $4.8bn reflects recovery from losses at Westinghouse nuclear unit

Bolstered by its chip business, the struggling industrial conglomerate predicts first net profit in 4 years. (Photo by Tsuyoshi Tamehiro)

TOKYO (Reuters) -- Japan's Toshiba Corp appointed a former banker from a key creditor bank as CEO and forecast its first annual profit in four years, making progress in its efforts to recover from billions of dollars in losses at its U.S. nuclear unit Westinghouse.

Nobuaki Kurumatani, a former executive of Sumitomo Mitsui Financial Group, will become chief executive and chairman from April 1 and will be responsible for longer-term strategic decisions as well as dealing with outside parties.

Current CEO Satoshi Tsunakawa who has overseen Toshiba's attempts to dig itself out of its financial crisis, will become chief operating officer and be responsible for day-to-day operations.

Bolstered by its chip business, the struggling industrial conglomerate predicted net profit of 520 billion yen ($4.9 billion) for the year ending March, up from a prior forecast of a 110 billion yen loss and much higher than a consensus estimate of a 188 billion yen profit.

The revised estimate comes on the back of a sale of Toshiba's claims against now-bankrupt Westinghouse Electric Co LLC to a group of hedge funds, a deal that also affords the Japanese firm tax benefits.

The return to net profit, combined with an additional 600 billion yen gained from the issue of new shares to overseas funds, will help Toshiba avoid falling into negative net worth for a second consecutive year, allowing it to remain a listed company.

That in turn means less urgency for Toshiba to sell its prized chip business - the world's second biggest producer of NAND memory chips - to a consortium led by U.S. private equity firm Bain Capital.

The revised estimates also showed, however, that without the memory chip division, its annual operating profit is set to be zero.

Toshiba says it aims to complete the sale of the chip unit by an agreed deadline of the end of March but it is widely viewed as unlikely to gain the necessary regulatory clearance in time. If it doesn't complete the deal by then, it has the option of walking away, sources have said.

Kurumatani is currently the president of the Japanese arm of European private equity firm CVC Capital Partners and is a former deputy president of Sumitomo Mitsui Banking Corp, one of Toshiba's main lenders.

Toshiba Corp.

Japan

Market(Ticker): TKS(6502)
Sector:
Industry:
Consumer Durables
Electronics/Appliances
Market cap(USD): 19,100.22M
Shares: 6,520.70M

Get Insights on Asia In Your Inbox

To read the full story, Subscribe or Log in

Get your first month for $0.99

Redeemable only through the Subscribe button below

Once subscribed, you can…

  • Read all stories with unlimited access
  • Use our smartphone and tablet apps

To read the full story, Subscribe or Log in

3 months for $9
SUBSCRIBE TODAY

Take advantage of this limited offer.
Subscribe now to get unlimited access to all articles.

To read the full story, Update your account

Resubscribe now to continue reading.
BEST OFFER:
Only US$ 9.99 per month for a full-year subscription

To read the full story, Subscribe or Log in

Once subscribed, you can…

  • Read all stories with unlimited access
  • Use our smartphone and tablet apps

To read the full story, Subscribe or Log in

3 months for $9
SUBSCRIBE TODAY

Take advantage of this limited offer.
Subscribe now to get unlimited access to all articles.

To read the full story, Update your account

We could not renew your subscription.
You need to update your payment information.