Toshiba increases annual loss forecast after accounts scandal

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TOKYO: Toshiba said on Thursday 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.

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The company—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 its sectors, including memory chip and computer sales.

Its new forecast of a 710 billion yen loss for the fiscal year to March—well up from an earlier 550 billion yen net loss estimate—came as Toshiba said it lost 479.4 billion yen in the nine months to December, reversing a profit from a year earlier.

The disappointing figures follow Toshiba’s announcement last month it was inflating tenfold a damages claim against a group of former executives in the wake of its accounting scandal.

The company said it was now seeking around $27 million from five former top managers, including a trio of 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 pump up 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 percent 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 seven 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.

AFP

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