In early trading in Tokyo on Thursday, the troubled company’s stock plummeted as much as 25.55 percent at one point, virtually the maximum fall permitted for the day, before paring losses to close 16.97 percent down.
Over the past three days, the Japanese conglomerate’s market value declined by about 781 billion yen ($6.70 billion, 6.42 billion euros), losing more than 40 percent and virtually erasing all gains for the year.
On Tuesday, Toshiba said in a statement that costs linked to the acquisition last year by its US subsidiary of a nuclear service company would possibly come to “several billion US dollars, resulting in a negative impact on Toshiba’s financial results.”
The exact figure of the potential writedown was still being worked out, Toshiba President Satoshi Tsunakawa told reporters after the announcement. He hinted the company may seek support from financial institutions to boost capital.
“Those who were not being able to sell are selling today,” Nobuyuki Fujimoto, senior market analyst at SBI Securities in Tokyo, told the news agency AFP, referring to the previous day’s declines of 12 percent on Tuesday and 20 percent on Wednesday.
Nuclear and other woes
Once a proud pillar of corporate Japan, Toshiba has been besieged by problems, most notably a profit-padding scandal in which bosses for years systematically pushed subordinates to cover up weak financial results.
In an intensive overhaul, the company has been shedding businesses and announced the sale of its medical devices unit to camera and office equipment maker Canon.
Investors had welcomed the makeover, and shares had climbed 77.3 percent this year through Monday before the string of declines began. They have now reduced the gain for the year to just 3.5 percent.
Toshiba’s US loss is related to the valuation of the purchase by subsidiary Westinghouse Electric of the nuclear construction and services business of Chicago Bridge & Iron. Analysts have said uncertainty over the exact amount of the possible write-down was fuelling investor anxiety.
Woes have been compounded by Standard & Poor’s (S&P) cut of two of the firm’s credit and debt ratings by one notch each in response to the potential loss. S&P also placed the ratings on watch, suggesting they could be downgraded further.
SMBC Nikko Securities’ credit analysts Yutaka Ban and Kentaro Harada said in a report issued Thursday that an additional ratings cut by Tokyo-based Rating and Investment Information in particular will “make it difficult” to raise cash through corporate bonds and other means. The possibility that banks may become reluctant to lend money is “a bigger problem,” he said.
At the moment, Toshiba’s full-year forecast is for a net profit of 145 billion yen, up 45 percent from an earlier estimate, on sales of 5.4 trillion yen. But Tuesday it said it would release a revised earnings forecast as soon as possible to reflect the coming writedown.
uhe/jd ( Reuters, AFP)