Toshiba expects net profit for 2016 fiscal year to lose 1 trillion yen

[Global Technology Reporter Wang Huan] According to a report from Japan’s Kyodo News on March 29, Toshiba Corporation, which is in a period of operating reorganization, announced on the 29th that US nuclear electronics company Westinghouse (WH), which continues to suffer huge losses, has applied for “United States Federation” Article 11 of the Bankruptcy Code. It is estimated that after the loss processing, Toshiba's fiscal year 2016 (April 2016 to March 2017) net profit will be 1.01 trillion yen (about 62.4 billion yuan), a record high among domestic companies outside financial institutions. The amount of insolvent funds reached 620 billion yen, showing a rare state of affairs.

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Westinghouse that filed for bankruptcy ceased to be the target of the consolidated settlement of Toshiba. Eliminating the risk of overseas nuclear power business and preventing the suspension of Toshiba’s biggest unresolved case has finally been resolved. In the future, while coordinating with the court, Toshiba will sell Westinghouse shares and withdraw from overseas operations.

Toshiba President Gang Chuanzhi apologized for the huge loss at a press conference in Tokyo. He pointed out that "it can be said that the overseas nuclear power business with the biggest problem will be withdrawn, the risk is basically gone." It also said: "In order to eliminate insolvency and strengthen the financial foundation of the collapse, we will take full measures."

In Toshiba’s performance forecast released in February, the loss amounted to 390 billion yen and the amount of insolvency was 150 billion yen. However, due to the additional loss of 620 billion yen due to the bankruptcy of Westinghouse, the financial situation has deteriorated significantly. Among the domestic companies outside the financial institutions, the largest amount of losses so far has been Hitachi's 2008 fiscal year of 787.3 billion yen.

Toshiba will hold an extraordinary general meeting on the 30th to request approval of the plan to spin off the semiconductor business to establish a new company to fill the losses. The deterioration of the financial situation and the gradual sale of good business practices have been criticized.

Including the holding company that applies for the applicable bankruptcy law at the same time, Westinghouse’s liabilities totaled US$9,811 million. Because it is pointed out that there are claims from creditors, etc., the liability may still increase. In order to continue the construction of nuclear power plants, consultations are being conducted with the contracted power companies.

Toshiba spent more than 6,000 billion yen to acquire Westinghouse in 2006 and strived to expand its overseas nuclear power business, but ended in failure. Domestic operations such as reactor scrapping will continue, and efforts will be made to develop social infrastructure such as elevators and railway systems.

Westinghouse has provided reactors for US nuclear-powered aircraft carriers and nuclear submarines in the past. The Trump administration alleged that “this is a potential national security issue” and has expressed concern. Gang Chuan said "has not heard of" the U.S. government's request.

Small information: Toshiba Corporation, which started a nuclear power business in Japan, purchased the US nuclear power company Westinghouse Electric (WH) for about 600 billion yen in 2006, and obtained the PWR manufacturing technology that dominates overseas. Toshiba has obtained orders for reactors in China and plans to build nuclear power plants in the UK and India. However, due to lagging projects, it has continued to generate huge losses, resulting in the bankruptcy of Westinghouse. Toshiba will withdraw from overseas nuclear power business. The goal of building more than 60 reactors globally through Westinghouse until 2030 is also called waste paper.

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