Toshiba Sees Finances Improving After Narrowing Its Businessby and
Sales to declines as products scaled back, profits seen rising
Electronics maker seeks recovery after accounting scandal
Toshiba Corp. said its profitability will improve in the next fiscal year as it scales back on products such as personal computers and home appliances.
Operating profit will be 120 billion yen ($1.1 billion) and revenue 4.9 trillion yen in fiscal 2016, the electronics maker said on Friday, in a presentation titled “A road map to a new Toshiba.” Analysts were projecting, on average, a profit of 145.5 billion yen on sales of 5.77 trillion yen, according to data compiled by Bloomberg.
Toshiba, which makes everything from computers to nuclear power equipment, is seeking to revive profits by narrowing the scope of its business lines. An accounting scandal has left the Japanese conglomerate in tatters, facing record losses, job cuts and potential spinoffs. The company is selling its medical unit to Canon Inc., home-appliance business to China’s Midea Group Co. and is considering letting go of its PC operations.
“The trust we’ve lost won’t be regained overnight,” President Masashi Muromachi said at a briefing at Toshiba’s Tokyo headquarters. “We must transform into a company that can deliver consistent growth.”
For the current fiscal year, which ends this month, Toshiba kept its operating loss forecast intact, at 430 billion yen, on revenue of 6.2 trillion yen. Still, the company is re-testing the value of its nuclear power operations. That business is at the center of an investigation by the U.S. over allegations that it hid $1.3 billion in losses, according to two people familiar with the matter. Toshiba now expects the goodwill on its Westinghouse Electric Co. to be 351 billion yen, from an originally anticipated 385 billion yen.
Toshiba, which said it’s cooperating with U.S. authorities on inquiries, disclosed in November that the Westinghouse unit booked writedowns on new construction projects and automation services in fiscal 2012 and 2013. The value of Westinghouse wasn’t impaired by the writedowns and the accounting was accurate, Yu Takase, a spokeswoman for the company, told Bloomberg News at the time of the disclosure.
Toshiba is also cutting back on hiring, and said it’s on track to eliminate 1,300 jobs from its computer business.