Toshiba stares at huge losses on US nuclear power acquisition

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Tokyo: Toshiba Corp. warned that it may book a write down of several billion dollars related to an acquisition made by US unit Westinghouse Electric.

The company’s shares fell 12% to ¥392 at the close in Tokyo on Tuesday, the biggest decline since December 2015, after earlier reports that it may book a loss of as much as ¥500 billion ($4.3 billion). Toshiba issued a statement after the market closed, saying that while the final charge was yet to be determined, it would impact earnings.

The reported loss is related to a dispute over the value of an acquisition by Westinghouse Electric, the Nikkei reported on its website. The write down would come to about ¥100 billion, the newspaper said, while broadcaster NHK said the charge may total as much as ¥500 billion. Such a loss would eclipse the ¥168 billion in net income that analysts are projecting, on average, for Toshiba’s current fiscal year through March. The Tokyo-based company booked a loss of ¥460 billion last year.

“Assuming the article to be accurate, we would expect Toshiba’s weak financial standing to be damaged further,” said Takeshi Tanaka, an analyst at Mizuho Securities Co.

Toshiba didn’t elaborate further in Tuesday’s statement to the Tokyo Stock Exchange, other than to say that the write down would exceed an initially anticipated amount of $87 million, and would probably be in the billions. The increase in charges is related to project costs incurred by CB&I Stone & Webster Inc., a nuclear construction and services provider that was bought by Westinghouse Electric in January.

Toshiba shares had climbed 77% this year through Monday as the company recovered from an accounting scandal that claimed the jobs of three presidents, led to record losses and prompted the company to cut staff and sell off businesses. The conglomerate, which makes everything from refrigerators, chips and computers to nuclear power equipment, is also being sued by shareholders accusing it of misleading them about its finances.

Toshiba was fined a record ¥7.4 billion yen in December last year after Japanese regulators found the manufacturer misled investors by filing false financial statements. The watchdog has also been gathering evidence to determine whether to seek criminal prosecutions of former bosses over the scandal.