Brief respite for Toshiba as auditors sign off on full-year earnings
Tokyo — Toshiba’s auditors signed off on its full-year earnings, offering some temporary relief as the Japanese company struggles to stabilise after an accounting scandal, massive write-downs and a legal spat that threatens to delay the sale of its chip business.
The industrial and consumer electronics maker reported a ¥965.7bn ($8.8bn) net loss for the year ended March 31, it said in a statement. That compares with a ¥977.4bn loss average of analysts’ estimates and the Tokyo-based company’s own outlook of as much as ¥1.01-trillion. Toshiba forecast a ¥230bn in net income for the current fiscal year.
While the qualified endorsement for the numbers marks a milestone for Toshiba, PricewaterhouseCoopers Aarata also criticised the company’s internal controls. Toshiba said that the adverse opinion may have a "severe negative impact" on its financing, earnings and ability of shareholders to sell their shares.
The company has been on a watchlist for possible expulsion from the Tokyo Stock Exchange after overstating profits to cover up multibillion-dollar losses in its nuclear business. It may face a delisting depending on a review by the exchange, or if it fails to patch up its balance sheet by March 2018.
"The fact that they have finally managed to file and got a qualified endorsement is good news," said Hideki Yasuda, an analyst at Ace Research Institute. "That’s not to say that the risk of delisting is gone, but at least they’ve cleared the most immediate hurdle."
Toshiba has to sell its flash memory unit by March 2018 to avoid reporting negative shareholders’ equity for a second fiscal year, which would automatically trigger a delisting.
The divestment may raise about ¥2.1-trillion, according to people familiar with the matter. An initial public offering of energy-metering company Landis+Gyr will earn Toshiba another ¥161.7bn for its 60% stake, the company said last month.
The shares of Toshiba rose 2.4% to ¥297 at lunchtime in Tokyo. The stock has climbed 4.6% this year as David Einhorn’s Greenlight Capital, Effissimo Capital Management and King Street Capital Management joined the list of investors.
The Japanese company said the current year profit outlook included proceeds from the Landis IPO, but not from the chip unit.
Toshiba is forecasting a 59% rise in operating profit to ¥430bn, while sales will climb to ¥4.97-trillion.
Toshiba also reported earnings results for the latest quarter, which ended June 30. Operating profit climbed almost sixfold from last year to ¥96.7bn as profit from chip operations quadrupled. Sales rose 8.2%, while net income fell 37% to ¥50.3bn.