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Toshiba warned the market it could book an impairment loss of “several billion dollars” at its US nuclear division and reconsider its presence in that industry as accounting issues returned to blight one of Japan’s biggest names.
With Toshiba’s financial position becoming more clouded by the announcement, its chief executive, Satoshi Tsunakawa, said yesterday in Tokyo that the company was “mulling ways to raise additional capital”.
Mr Tsunakawa, who took over in June, said: “We are considering steps that include some sort of capital strategy.” He and Toshiba’s chief financial officer were unable to rule out the risk that the charge would wipe out the company’s shareholder equity, which stood at ¥363bn at the end of September.
Toshiba said the writedown “far exceeded” earlier estimates, although the exact size was still under discussion. It lands a heavy blow on the conglomerate’s efforts to rebuild investor confidence after a 2015 accounting scandal in which the group admitted inflating its net profits by $1.3bn over seven years.
Since then Toshiba has stressed that the nuclear division, along with the semiconductor memory business, was one of the pillars of its growth strategy.
Yesterday’s after-market announcement related to US nuclear business Westinghouse’s $229m acquisition last year of Chicago Bridge & Iron’s (CB&I) nuclear construction subsidiary, Stone & Webster. It followed a sharp fall in Toshiba’s share price, as investors digested earlier Japanese media reports flagging the possibility of a large impairment charge. The new charge arises from a litigious and still unresolved dispute between Toshiba and CB&I over the calculation of working capital and liability for two delayed US nuclear projects, where costs have ballooned.
“Westinghouse has found that the cost to complete the US projects will far surpass the original estimates . . . resulting in far lower asset value than originally determined, leading to a possible recognition of goodwill far exceeding the original December 2015 estimate of $87m,” said Toshiba.
The statement added that, while the company was still testing how much impairment would have to be booked, estimates showed a level of several billion dollars. The announcement marks the second large writedown relating to Toshiba’s stake in the US nuclear business, after it booked a goodwill impairment charge of $2.3bn in April.
