Toshiba Corp. gained the most in more than four years in Tokyo trading after appointing Masashi Muromachi as president and projecting an annual loss, steps toward wrapping up an accounting scandal that may cost $1.2 billion.
The shares rose 7.7 percent, the most since March 2011, to 393.9 yen as of the close in Tokyo. That pared the stock’s decline since May 8, the day the accounting irregularities were disclosed, to 19 percent. Trading volume was more than triple the three month average.
Muromachi, 65, had been named interim president in July, Tokyo-based Toshiba said Tuesday. The company said it expects to report a net loss for the 12 months ended March, without providing a specific number.
Toshiba is working to regain investor confidence lost after it withdrew forecasts and canceled its year-end dividend, saying it had discovered irregularities in accounting for construction projects. Later it widened the probe to cover the entire company. Hisao Tanaka stepped down as president in July along with his two predecessors. In the scandal’s wake, the company appointed a six-member committee charged with revitalizing the board and preventing future improprieties.
“Muromachi was chosen as president precisely because we find ourselves in an emergency,” Hiroyuki Itami, an outside board member, said at a press conference on Tuesday. “We judged that his management skills are necessary for the company at this time.”
The stock was raised to outperform from neutral at Macquarie Group Ltd.
Muromachi, who holds a graduate degree in engineering from the prestigious Waseda University, has spent much of his 40 years with Toshiba in the company’s semiconductor business. He ran the operations since 2004, overseeing the shift to flash memory, and became a director in 2013.
The semiconductor unit makes memory chips, light-emitting diodes, sensors and other components and is the company’s most profitable business. It was left largely untainted by the accounting scandal that spanned personal computers, nuclear, hydroelectric, wind-power equipment, air-traffic control and railway systems.
Toshiba’s third-party report released on July 21 detailed various practices that led to overstatement of profits, linking them directly to former presidents Tanaka, Norio Sasaki and Atsutoshi Nishida. Muromachi’s name wasn’t mentioned.
Toshiba also announced board changes Tuesday, increasing the number of independent directors to seven from four.
No charges have been filed against Toshiba or its executives.
The company has said eight executives will have their pay lowered by 40 percent for the three months from July while Muromachi took a 90 percent cut from this month.
Toshiba last month sold its 4.6 percent stake in Finnish elevator and escalator maker Kone Oyj, citing the need to improve the balance sheet. It will book a gain of about 113 billion yen from the sale.
The company is a pillar of Japan Inc., making everything from nuclear reactors to laptop computers and memory chips. During its 140-year history, the company has built up holdings in more than 300 affiliates, partners and customers.
“I feel grave responsibility for not being able to prevent this state of affairs,” Muromachi said Tuesday. “In this time of greatest crisis since Toshiba’s founding, I plan to focus first and foremost on putting in place prevention policies.”
(Corrects third paragraph of story published Aug. 19 to show Toshiba hasn’t appointed new chairman.)