ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronEye IconIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailMenu BurgerPositive ArrowIcon PrintIcon SearchSite TitleTitle ChevronIcon Twitter
Toshiba in turmoil

Toshiba to halve profit outlook as energy business costs mount

Japanese group to book reserves to hedge against economic slowdown

The industrial conglomerate aims to quickyl book reserves and other costs to help reach operating profit targets for 2024. (Photo by Yoshiyuki Tamai)
The industrial conglomerate aims to quickyl book reserves and other costs to help reach operating profit targets for 2024. (Photo by Yoshiyuki Tamai)

TOKYO -- Toshiba is set to slash its operating profit forecast for the year through March to between 20 billion yen and 30 billion yen ($182 million and $273 million), with growing costs in sectors like energy dragging down earnings from core operations.

The company plans on Wednesday to downgrade the operating profit projection of 60 billion yen that was made in November. Last fiscal year, it logged an operating profit of 86.1 billion yen. The downgrade will coincide with the Tokyo-based group's earnings release for the April-December quarter.

With fears growing of a global economic slowdown, Toshiba has been re-evaluating the business environment and the risks facing various fields. It plans to book additional reserves in segments including energy as a result of its findings.

Rough going in existing operations like system chips is also pushing down profit. A strong performance by Toshiba Tec, which makes point-of-sale system products, likely surpasses a fall forecast but won't be enough to make up the difference overall.

There are bright spots in railway systems and air-conditioning operations. Group sales will likely come close to the projected 3.6 trillion yen -- down from nearly 4 trillion yen the year before -- thanks in part to the yen softening beyond the company's November forecast of 105 to the dollar.

As of autumn, Toshiba projected an annual group net profit of 920 billion yen, up 14% on the year, owing largely to the sale of its semiconductor memory unit Toshiba Memory. But the coalition of American, South Korean and Japanese buyers, led by U.S. private equity firm Bain Capital, has stepped up scrutiny of the assets of the memory company, which remains a Toshiba affiliate by the equity method. If the accounting process gives rise to new expenses, that could weigh down the conglomerate's bottom line.

Toshiba will maintain its medium-term plan targeting 400 billion yen in operating profit by the year ending March 2024. To realize that goal, it aims to book necessary expenses as much as possible in the present earnings period, and start focusing on promising fields such as connected devices -- collectively known as the "internet of things."

 

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.

Get Unlimited access

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 the Nikkei Asian Review 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