Toshiba reports financial results, avoids delisting

Toshiba Corp, which reported its long-awaited earnings results today, says it has "dedicated itself" to eliminating risk related to the overseas nuclear power business, swiftly recovering and strengthening its financial base and strengthening its organisational management. The industrial and electronics conglomerate posted a net loss of ¥‎965.7 billion ($8.8 billion) for the financial year ended 31 March, an improvement of ¥‎30 billion from a revised outlook provided in June, but still more than double the loss of the previous year.

Toshiba was able to meet the deadline to report its results after its auditor, Auditor PricewaterhouseCoopers Aarata gave a "qualified opinion" on the financial statements, meaning it broadly endorsed the results. Meeting the deadline reportedly reduces the risk for Toshiba of being delisted from the Tokyo Stock Exchange.

The company forecasts a profit for the 2017 financial year, ending 31 March 2018, of ¥‎230 billion, a 59% rise in operating profit to ‎¥430 billion and an increase in sales to ‎¥4.97 trillion.

Toshiba also reported earnings results for the latest quarter, which ended June 30. Operating profit climbed almost sixfold from last year to ¥96.7 billion as profit from chip operations quadrupled. Sales rose 8.2%, while net income fell 37% to ¥50.3 billion.

Toshiba noted that, in "eliminating risk" related to the overseas power business, Westinghouse Electric Company, its US subsidiaries and Toshiba Nuclear Energy Holdings (UK) Limited, had all filed for Chapter 11 proceedings under the US Bankruptcy Code on 29 March. These filings deconsolidated Westinghouse from Toshiba, starting from the FY2016 full-year business results, and the financial results of Westinghouse are now classified as discontinued operations in Toshiba's consolidated profit and loss statement.

Reflecting Westinghouse's deconsolidation, Toshiba's net sales decreased by ¥284 billion to ¥4.87 trillion.

A presentation on the results by Masayoshi Hirata, Toshiba's representative executive officer and corporate executive vice president, noted changes to the parent company guarantees for Westinghouse. On 27 July, Toshiba and the owners of the project to construct two Westinghouse AP1000 reactors, units 2 and 3 at the VC Summer nuclear power plant in South Carolina, USA, reached agreement on Toshiba's parent company guarantee for fulfilment of the project. The agreed amount is the maximum that Toshiba announced in its revised outlook issued on 23 June. This agreement, along with that reached with the owners of the project to construct two Westinghouse AP1000 reactors, units 3 and 4 at the Vogtle plant in Georgia, eliminates any further risk to Toshiba related to the construction of the reactors.

The amount of Toshiba's other parent company guarantees for Westinghouse is ¥28.5 billion lower than the provision in loss from discontinued operations made in the revised outlook on 23 June, as an agreement on cancellation of part of the guarantees was made at the end of June. The breakdown of provision for parent company guarantees is ¥412.9 billion for Vogtle, ¥243.2 billion for VC Summer and ¥31.6 billion for others.

Scana Corporation subsidiary South Carolina Electric & Gas on 31 July announced its decision to cease construction of two AP1000 reactors at VC Summer. The announcement followed co-owner Santee Cooper's decision to suspend construction because of projected completion delays and cost overruns. Scana is to file for regulatory permission to abandon the project.

Construction began on the first of four AP1000 reactors in the USA - Summer unit 2 and Vogtle unit 3 in Georgia - in March 2013, with work beginning on Summer 3 and Vogtle 4 in November of that year. Work is still continuing at the Vogtle project, for which Westinghouse recently negotiated a long-term services agreement with co-owner Southern Nuclear Co.

AP1000s under construction in China are unaffected by the Westinghouse bankruptcy filing. Wang Binghua, chairman of China's State Power Investment Corporation, recently vowed that his company will make sure its first two AP1000 plants at Sanmen and Haiyang will start producing electricity by end of 2017.

Researched and written
by World Nuclear News