Toshiba shares fall after earnings delay, possible nuclear sale

[TOKYO] Toshiba Corp's shares fell in Tokyo after the company delayed its earnings announcement for the second time, as challenges with its nuclear unit could lead to a wider restructuring of its business.

The stock dropped as much as 8.1 per cent to 198.5 yen on Wednesday. The Tokyo-based conglomerate said Tuesday that it's reevaluating Westinghouse's position within the group and it may deconsolidate the nuclear unit by selling a controlling equity stake.

Toshiba made the announcement as it gained approval to delay the release of third-quarter earnings until April 11.

Westinghouse has been at the center of Toshiba's most recent problems amid cost overruns on nuclear projects and related litigation. While the company was due to report final figures on Tuesday, it said it needed more time to examine reports of "inappropriate pressure" internally to push through the acquisition of a US construction firm specialising in building atomic plants.

Toshiba has estimated it will need to take a writedown of 712.5 billion yen (S$8.78 billion) but it hasn't been able to get its auditors to sign off on the earnings results.

"It looks increasingly likely that Toshiba may need to go through a bank sponsored restructuring," Zuhair Khan, an analyst at Jefferies in Tokyo, wrote in a report.

"It is hard to see Toshiba handling all of its problems on its own."

The Tokyo Stock Exchange kept Toshiba on its list of securities on alert in a December announcement, after originally being included for overstating profits from 2008 through 2014. The company is due to file a report detailing plans to improve internal controls to the bourse today. If deemed insufficient, the company will face delisting.

The stock, which has dropped almost 30 per cent this year, will be moved to the second section of the TSE, Toshiba President Satoshi Tsunakawa in a press briefing Tuesday afternoon. The downgrade, which is likely to come after the company reports full-year earnings, will trigger an automatic sell off by index funds. He declined to comment on the possibility of delisting.

"We need further reforms to overcome the difficulties resulting from the accounting scandal and losses in the nuclear business," Mr Tsunakawa said at the briefing.

"That's something myself the management and employees have to take responsibility for and work toward bringing the company back on the path of growth."

BLOOMBERG