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Toshiba Targets Doubling Profit in 3 Years on Chips, Medical

Toshiba CEO Hisao Tanaka
Hisao Tanaka, president and chief executive officer of Toshiba Corp.. Photographer: Kiyoshi Ota/Bloomberg

Aug. 7 (Bloomberg) -- Toshiba Corp., the Japanese maker of products from televisions to steam turbines, forecast its operating profit will double in three years, as it expands in semiconductors, medical systems and energy.

Operating profit may rise to 400 billion yen ($4.1 billion) for the year ending March 2016 from 193.4 billion yen last fiscal year, the Tokyo-based company said in a statement today. That compared with the 384 billion yen average of 19 analyst estimates compiled by Bloomberg.

President Hisao Tanaka, who said the maker of magnetic resonance imaging devices is considering health-care related acquisitions, also plans to boost production of flash memory chips and speed up expansion abroad with its energy operations. The company is reorganizing its television business after the division lost about 100 billion yen in the past two years, hurt by competition from other makers including Samsung Electronics Co.

“We’ll expand overseas aggressively, as there is little growth for domestic businesses,” said Tanaka during a mid-term outlook presentation in Tokyo today.

The company forecast sales of 7 trillion yen in the year ending March 2016, 4.4 percent higher than the average of 17 analyst estimates compiled by Bloomberg.

Toshiba fell 3.7 percent to 414 yen at the close in Tokyo trading. The stock has risen 23 percent this year, compared with a 33 percent gain for Japan’s benchmark Nikkei 225 Stock Average.

Nuclear Power

The Tokyo-based company is targeting sales of 600 billion yen from health-related businesses in the year ending March 2016. It plans to raise sales from the division to 1 trillion yen in the year ending March 2018, Tanaka said.

Toshiba is targeting 1.4 trillion yen in sales from its storage devices including NAND flash memory over the next three years, it said.

The company delayed a nuclear sales goal of 1 trillion yen to fiscal year 2018 from 2017, according to Tanaka. In the U.S., a glut of shale gas, government-subsidized wind power and slack demand has slashed power prices more than 40 percent since 2008, making it more difficult to justify repairs and continued operation of aging nuclear units.

The company is expanding its power business, as it’s benefiting from demand for hydro, wind and gas-fired stations following the Fukushima nuclear accident in 2011.

Tanaka said talks to sell a stake of its Westinghouse Electric atomic-power business continue. In December the company said it may sell as much as 36 percent of its 87 percent state. Toshiba was compelled to buy 20 percent of Westinghouse in January after Shaw Group Inc. used an option to sell its stake.

Toshiba’s flash-memory factories are running at full capacity, helped by demand from smartphones and tablet computers, Tanaka said in June. Global smartphone shipments jumped 46 percent to 722 million units last year, according to Framingham, Massachusetts-based IDC Corp.

The company plans to expand the No. 5 facility at its Yokkaichi plant to make flash memory, it said July 2.

To contact the reporter on this story: Naoko Fujimura in Tokyo at nfujimura@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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