Toshiba expects $6B annual loss amid accounting scandal

Agence France-Presse

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The Japanese conglomerate is struggling to recover from a profit-padding controversy

SCANDAL-HIT CONGLOMERATE. Toshiba Corp's President and Chief Executive Officer (CEO) Masashi Muromachi at a news conference in Tokyo, Japan, December 21, 2015. File photo by Kimimasa Mayama/EPA

TOKYO, Japan – Toshiba said Thursday, February 4, it has expanded its full-year loss forecast to an eye-watering $6.0 billion, as one of Japan’s best-known firms accounts for an embarrassing profit-padding scandal.

Toshiba – a vast conglomerate that makes everything from rice cookers to nuclear plants – also pointed to a global economic slowdown, saying it was taking a big bite out of results across the company, including memory chip and computer sales.

Its new loss forecast of 710 billion yen ($6.0 billion) for the fiscal year to March – well up from an earlier 550 billion yen ($4.6 billion) net loss – came as Toshiba said it lost 479.4 billion yen in the 9 months to December, reversing a profit from a year earlier.

The disappointing figures come after Toshiba announced last month it was inflating a damages claim against a group of former executives by a whopping tenfold in the wake of its accounting scandal.

The company said it was now seeking around $27 million from 5 former top managers including 3 presidents for their role in the fraud.

Japan’s market watchdog last month slapped the firm with a record $60 million fine over the affair, which saw the company inflate profits by about $1.2 billion since the 2008 global financial crisis.

A company-hired panel found top executives had pressured underlings systematically to inflate profit figures to hide poor results.

Toshiba’s business was dented by the global downturn, while the 2011 Fukushima disaster killed off demand for atomic power at home in a big blow to the firm’s key nuclear division.

The scandal ushered in a wide-ranging restructuring, which included thousands of job cuts. The company has about 200,000 employees globally.

“Toshiba Group has decided to execute bold structural reforms of its unprofitable businesses, and accordingly executed sales of fixed assets and other measures,” it said Thursday.

“For this reason, substantial losses were recorded” in the latest period, it added, citing restructuring costs.

The company pledged to press on with the overhaul.

It Tokyo-listed shares closed up 2.90% at 198.5 yen before Toshiba announced its earnings report, bucking a downturn in the broader market.

The accounting scandal was one of the most damaging to hit Japan in recent years. The case forced an incumbent president and 7 other top executives to resign last year and hammered the company’s share price.

Toshiba is facing lawsuits from investors, while Moody’s and Standard & Poor’s downgraded its credit rating to junk after the scandal. –

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