Toshiba expects $2.3 billion write-down on Westinghouse

Japan's Toshiba Corporation announced today it expects to take an impairment charge of JPY260 billion ($2.3 billion) for part of the goodwill of its US-based nuclear power subsidiary Westinghouse Electric Company.  

Toshiba led a group of firms which bought the US-based reactor vendor from the UK's BNFL in 2006 for $5.4 billion, taking 77% for itself. The purchase created a global nuclear business with expertise in both pressurised water and boiling water reactors and large interests in Europe, Japan and the USA. Toshiba has since increased its stake in Westinghouse to 87%, with Kazakhstan's Kazatomprom holding 10% and Japanese heavy machinery maker IHI Corporation holding 3%.

In a statement today, Toshiba said that when it acquired its stake in Westinghouse in 2006, $2.9 billion - the difference between the acquisition price and the fair value of Westinghouse's business assets - was recorded as goodwill, an intangible fixed asset, on Toshiba's consolidated balance sheet. It added that every fiscal year it calculates the fair value of its nuclear power business - including Westinghouse - and conducts impairment testing for the goodwill recorded on its consolidated financial statements.

"The forecast for Toshiba's financial condition has deteriorated significantly, bringing changes to Toshiba's funding environment, including rating downgrading," the company said. It has therefore conducted a re-evaluation of the fair value of the nuclear business's assets and debts, excluding goodwill.

"The value of intangible assets, mainly in the form of technology assets, increased as a result of the progress and growth of the business following the acquisition of Westinghouse, causing a relative decrease in the goodwill," Toshiba said. The company said it currently expects to recognize a $2.3 billion impairment loss as an operating loss in its consolidated income statement for financial year 2015 (1 April 2015 to 31 March 2016).

Toshiba said the final amount of the impairment will be announced with the FY2015 business results.

The company has also revised its forecast for FY2015. It now expects net sales to total JPY5500 billion, down from its earlier forecast of JPY6200 billion, while its operating loss is now expected to be some JPY690 billion instead of JPY430 billion.

Researched and written
by World Nuclear News