Toshiba puts off release of earnings

[TOKYO] Shaken by the huge loss incurred from its nuclear power business, Toshiba Corp announced Tuesday that it is again postponing the release of its consolidated accounts for the April-December 2016 period.

Announcement of the results had been due on the day. Toshiba earlier postponed the announcement in February.

Toshiba applied to the Kanto Local Finance Bureau of the Financial Services Agency for permission to postpone the submission of documents for the quarter, including the earnings results. Its request was approved, and April 11 is the new deadline for submitting the documents.

The second postponement was made because Toshiba needed more time to investigate the internal management of its US nuclear power business subsidiary, Westinghouse Electric.

To finalize Toshiba's accounts, its internal management must be in good order.

Toshiba President Satoshi Tsunakawa held a press conference Tuesday evening to explain the details.

According to sources close to the matter, while Toshiba was working to finalize the amount of losses from its nuclear power business in the United States, a whistleblower said Westinghouse's executive management pressured employees to underestimate the losses.

Toshiba then postponed the announcement from its initial date of Feb 14 to investigate the case.

As a result, there was found to have been improper pressure from the Westinghouse management, putting Toshiba under pressure to improve its internal management.

Toshiba also decided to investigate whether the improper pressure had been exerted before the October-December 2016 period. Toshiba had coordinated with auditing companies to release the accounts on the due date, but it decided it could not reach a conclusion in time.

Toshiba also postponed announcement of its accounts twice in 2015, when a problem with Toshiba's own improper accounting practices surfaced. It is rare for a company listed on the First Section of the Tokyo Stock Exchange to repeatedly postpone the announcement of accounts.

Due to this blunder, investors as well as client companies are likely to be more distrustful.

For now, Toshiba has indicated that it will likely report a loss of US$6.2 billion from its nuclear power business for the April-December 2016 period, mainly because of delays in construction of nuclear power plants by Westinghouse.

BLOOMBERG