Toshiba shares plunge after it delays report on earnings, multi-billion dollar nuclear writedown

Japan's Toshiba Corp shocks investors with a last-minute delay to a long-awaited financial update, saying it needs more time to probe its Westinghouse nuclear business.VIDEO: REUTERS
The logo of Japanese conglomerate Toshiba is seen on a wall of a building in Kawasaki.
The logo of Japanese conglomerate Toshiba is seen on a wall of a building in Kawasaki. PHOTO: AFP

TOKYO (BLOOMBERG, AFP) - Toshiba shares dived more than 9 per cent on Tuesday (Feb 14) after it surprised markets by delaying the release of financial results that were expected to include billions of dollars in losses tied to its US nuclear power unit.

The stock fell 9.45 per cent to 226.2 yen in early afternoon trading.

Toshiba is getting ready to announce a writedown of as much as 700 billion yen (S$8.75 billion) in its nuclear power business due to cost overruns at a US unit and diminishing prospects for its atomic-energy operations.

"At this point we have nothing to release. We will announce once we have finalised," said company spokesman Seiji Ishibashi, without providing anymore details.

The conglomerate had warned two months ago that the writedown could reach several billion dollars, triggering a share decline that has erased more than US$7 billion (S$9.94 billion) in market value. Toshiba had planned to announce results for the nine months through December at 12pm in Tokyo, but later said it needs more time.

The Nikkei newspaper said earlier Toshiba’s mounting losses would force the company to warn investors over its ability to continue as a 
going concern in its current form.

Toshiba will report a net loss in the high 400 billion yen range for the nine-month period, which will probably wipe out shareholder equity, the Japanese newspaper reported. A spokesman for Toshiba said the company did not immediately have a comment on the Nikkei report.

Toshiba's US$5.4 billion acquisition of Westinghouse in 2006 was a bet on the future of nuclear power and a way to balance volatility of chip operations with steady long-term revenues. The vision soured after the 2011 Fukushima meltdown damped demand and the company's next-generation AP1000 modular reactor technology proved difficult to implement.

Toshiba is now under pressure to come up with a plan for shoring up its balance sheet, which was already under strain from a profit-padding scandal in 2015 that led to restructuring, record losses and asset sales. Toshiba has put up for sale a significant stake in its flash memory operations and is considering other ways of raising cash.