Aug. 5 (Bloomberg) -- Toshiba Corp., Japan’s biggest chipmaker, slashed a forecast for operating profit and sales next fiscal year made before the global recession drove the company to post its first net loss in seven years.

Operating profit, or sales minus the cost of goods sold and administrative expenses, will probably be 250 billion yen ($2.6 billion) in the 12 months ending March 2011, half the amount targeted in May 2008, the Tokyo-based company said today. The company cut its sales estimate by 25 percent to 7.5 trillion yen.

President Norio Sasaki, 60, moved in June from running Toshiba’s nuclear-power, transportation and broadcasting-systems businesses, to replace Atsutoshi Nishida and restore profitability. The new chief executive’s priorities include continuing to reorganize “problematic businesses” and returning the chip operations to profit in the current fiscal year, Sasaki said when he was nominated in March.

Toshiba posted a record 343.6 billion net loss last fiscal year as its chip unit posted a 279.9 billion yen shortfall.

“The results in fiscal year 2008 were dreadful,” Sasaki said in a Tokyo briefing today. “Starting with restoring the capital base, we aim to transform ourselves into a company with a solid financial footing to start again for further growth.”

Capital Spending

The company, which also makes nuclear reactors and medical systems, will cut capital spending to 1.1 trillion yen for 2009 to 2011, from 1.64 trillion yen in the preceding three-year period, Toshiba said. Research and development costs will be reduced to 1 trillion yen from 1.17 trillion yen.

Toshiba fell 3.6 percent to close at 424 yen on the Tokyo Stock Exchange, prior to the announcement. The stock has climbed 16 percent this year, after losing 56 percent in 2008.

For the 12 months ending March 2012, operating profit will probably increase to 350 billion yen, on 8 trillion yen revenue, Toshiba said.

The company in May raised 289.7 billion yen in Japan’s biggest stock offering by a non-financial company in eight years to obtain funds for investment after the record loss. The stock offering, Toshiba’s first since 1981, helped the company improve its financial standing, after last year’s net loss more than tripled the Japanese chipmaker’s ratio of debt to equity.

“Achievement of the target numbers shown today won’t need an additional stock sale,” Sasaki said at the briefing.

Reactor Orders

The 250 billion yen of operating profit in the year to March 2011 “will mostly come” from the social infrastructure business, Sasaki said. The business, which includes nuclear reactors, turbines and elevators, is expected to grow further as “most economic stimulus packages are being invested in social infrastructure,” he said.

The company said it now expects orders for 39 nuclear reactors by 2015, up from a previous estimate of 33.

India plans to increase nuclear generating capacity by 77 percent in two years to help cut greenhouse gas emissions, the government said last month. Toshiba’s U.S. subsidiary Westinghouse Electric Co. and Hitachi Ltd., Japan’s biggest suppliers of nuclear plants, are likely to win orders for reactors in the country, the Nikkei newspaper reported on July 21.

China, the world’s fastest growing economy, plans to boost the use of nuclear power 10-fold to 86,000 megawatts by 2030, and India may add 40,000 megawatts of atomic generation by 2020.

To contact the reporter on this story: Pavel Alpeyev in Tokyo at palpeyev@bloomberg.net; Mariko Yasu in Tokyo at myasu@bloomberg.net.

Last Updated: August 5, 2009 05:37 EDT