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Toshiba's bottom line buoyed by chip market recovery

One-time charge from sale of US LNG business comes off books

Toshiba sees the pandemic taking a 90 billion yen bite out of operating profit in fiscal 2020. (Photo by Yoshiyuki Tamai)

TOKYO -- Toshiba is expected to turn around a year-earlier loss with a net profit of about 4 billion yen ($38.7 million) for the April-September half, as earnings rebound at its main chipmaking affiliate.

The Japanese industrial conglomerate's bottom line also improved with a write-off tied to the sale of its U.S. liquefied natural gas business coming off the books.

The company has not issued guidance for the fiscal first half, although it estimates that operating profit will take a 90 billion yen hit from the coronavirus pandemic for the full year through March. With a clearer outlook on the fallout, Toshiba is considering raising the fiscal year-end dividend from 10 yen a share.

Earnings at chipmaker Kioxia Holdings, in which Toshiba holds a 40% stake after a 2018 spinoff, have rebounded for the April-September half from a 151.2 billion yen net loss a year earlier. Sales geared toward data centers appear to have grown. Earnings contributions from Toshiba's equity-method affiliates improved as a result.

Sales of discrete chips for automotive applications, handled by Toshiba itself, were robust, and the elevator and escalator business performed well overseas. In the first half of fiscal 2019, Toshiba had taken a one-time charge of roughly 90 billion yen from the sale of its U.S. LNG business to France's Total, contributing to a net loss of 145.1 billion yen.

Toshiba's core energy infrastructure business suffered from the repercussions of the pandemic. Work to shore up safety at nuclear power plants was delayed, while unprofitable projects weighed on its power transmission segment.

Toshiba plans to continue cost-cutting in the fiscal second half. In addition to paring staff at subsidiary Toshiba Tec, it will step up joint procurement across the group.

The company is scheduled to disclose April-September results on Wednesday. For the full year ending March 2021, Toshiba forecasts sales declining 6% to 3.18 trillion yen with operating profit falling 16% to 110 billion yen.

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