ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronEye IconIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailPositive ArrowIcon PrintTitle ChevronIcon Twitter
Toshiba in turmoil

Toshiba scales down to stage turnaround

 (placeholder image)
President Masashi Muromachi talks about the company restructuring plans at a news conference.   © Reuters

TOKYO -- Toshiba will shed its noncore operations and cut jobs in and outside Japan to concentrate on three key areas --semiconductors, energy and infrastructure -- according to the company's business rehabilitation blueprint released Friday.

     "By achieving results from the restructuring efforts, we aim to turn all our operations profitable in the year through March 2017," President and Chief Executive Officer Masashi Muromachi told a news conference that day.

     The semiconductor business, centering on NAND flash memory chips, and the energy business, led by nuclear power equipment, have been Toshiba's two main pillars. The company had aimed to make medical equipment a third pillar, but the idea is no longer in play. The company has agreed to sell Toshiba Medical Systems, its key medical products unit, to Canon. Instead, Toshiba plans to grow what it calls its infrastructure business -- encompassing elevators, air conditioning, disaster-prevention systems and other building equipment -- as its third key driver.

     The company has also given up on white goods, agreeing to sell the business to China's Midea Group. It is holding negotiations with Fujitsu and Vaio, a personal computer spinoff from Sony, for a merger of its PC business.

     Toshiba sees those restructuring efforts to result in a 20% drop in sales from the estimate for fiscal 2015 to 4.9 trillion yen ($44 billion) in fiscal 2016. That translates to a 1.7 trillion yen decline, or roughly 30%, from fiscal 2014, when Toshiba reported a recent sales peak.

     Because Toshiba will have shed many money-losing operations, the company also anticipates turning an operating profit of 120 billion yen next fiscal year, reversing the 430 billion yen loss forecast for fiscal 2015.

     The rehabilitation blueprint also calls for sizable job cuts worldwide. In addition to reductions through business sell-offs, the company will seek to shrink its payroll by offering early retirement packages. The goal is to reduce the number of workers by about 34,000 from two years prior in fiscal 2016.

     In the area of semiconductors, Toshiba plans to invest a total of 860 billion yen over three years in its NAND flash memory business, building an additional plant at its Yokkaichi site in Mie Prefecture and upgrading equipment to make next-generation chips.

     In energy, the goal is to increase sales in the nuclear power business -- including U.S. unit Westinghouse Electric -- from the 740 billion yen estimated for this fiscal year to 870 billion yen in fiscal 2016. Toshiba has set its sights on securing orders for 45 nuclear reactors around the world by fiscal 2030.

     The company also looks to grow lithium-ion batteries and smart power meters as new revenue sources to complement the semiconductor and energy sectors.

     Other planned changes include reducing the number of in-house companies from seven to four -- one each for semiconductors, energy, infrastructure, and information and communications technology. This will take place next month.

     The parent company will forego new hires for fiscal 2017 and increase the size of pay cuts for workers with managerial positions starting next month.

     

(Nikkei)

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Try 1 month for $0.99

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends October 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to Nikkei Asia has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media

Nikkei Asian Review, now known as Nikkei Asia, will be the voice of the Asian Century.

Celebrate our next chapter
Free access for everyone - Sep. 30

Find out more