Toshiba delays earnings, chairman to step down

Toshiba Corp. announced Tuesday that chairman Shigenori Shiga will resign from his post to take responsibility for massive losses caused by its US nuclear power business.

The Japanese company said it would likely incur a loss of 712.5 billion yen (US$6.26 billion) after reviewing the value of a nuclear power plant builder purchased by its US subsidiary, Westinghouse Electric Co.

As a result, Toshiba’s liabilities would exceed its assets by 191.2 billion yen based on shareholders’ equity for its consolidated accounts for the April-December 2016 period.

For the year ending in March, the company will try to avoid falling into a state of excess liabilities by selling off its assets, among other means. However, as Toshiba has not yet obtained approval from an auditing firm on its financial statements, figures may change.

Shiga, who oversaw the nuclear power operations, will step down from his position as of February 15 and become an executive officer without the right of representation, according to the company.

Earlier in the day, Toshiba delayed the announcement of its consolidated accounts for the April-December 2016 period, saying the company is unable to come up with a concrete schedule for the announcement.

The firm had planned to announce the accounts at noon. Observers believe that Toshiba is struggling in its negotiations with an auditing firm over details such as the amount of settled accounts.

It is extraordinary for a major company like Toshiba, which is regarded as one of Japan’s representative firms, to announce a delay just before a scheduled announcement.

The Financial Services Agency said it received a report from Toshiba on the day stating the submission of documents regarding the settlement of accounts will be delayed.

In December, Toshiba announced it expected to incur a loss of several hundred billion yen in relation to the nuclear power plant builder purchased through Westinghouse Electric.

Toshiba recorded a loss of about 250 billion yen for its nuclear business, including Westinghouse Electric, in the business year ending in March 2016. Following a series of reported losses, the company has announced that it will place its nuclear business directly under the president and downsize its overseas nuclear business.

Toshiba’s financial condition has been exacerbated in the wake of an accounting scandal in 2015. If Toshiba’s debts exceed its assets as of the end of March, or the end of the company’s business year, and the situation is not corrected in a year, the company will be delisted.