Scandal-hit Toshiba warns of $4.5 bn annual loss, job cuts

  • Tokyo, AFP
  • Updated: Dec 21, 2015 18:22 IST
FILE - In this July 20, 2015 file photo, shoppers watch air conditioners displayed at an electronics store in Tokyo. Scandal-plagued Japanese manufacturer Toshiba Corp. is cutting 6,800 jobs after projecting a net loss of 550 billion yen ($4.5 billion) for the fiscal year through March 2016. Toshiba said Monday, Dec. 21, 2015, it will slash the jobs in its personal computer, video product and consumer electronic businesses. The job cuts equal about 3 percent of Toshiba's overall employees. (AP Photo/Shizuo Kambayashi, File) (AP)

Crisis-hit Toshiba warned Monday it would book a record $4.5 billion annual loss and slash thousands of jobs, as the vast firm’s shares plunged in Tokyo.

The moves are part of a restructuring announced in the wake of an embarrassing accounting scandal that rocked one of Japan’s best-known firms.

Monday’s announcement marked the latest blow to the 140-year-old firm after revelations earlier this year that executives systematically pressured underlings to inflate profits to hide poor results.

Investors dumped Toshiba shares in response to a weekend report about the eye-watering loss, which was confirmed after markets closed Monday.

The stock tumbled 9.80 percent to end at 254.8 yen ($2.10) before the official news.

Toshiba said it expected a 550 billion yen ($4.5 billion) net loss for the fiscal year to March, from a small loss a year earlier.

Among the job cuts are 6,800 positions in its lifestyle division -- which makes consumer electronics and home appliances -- and about 1,000 jobs at its corporate headquarters.

The company, which has about 200,000 employees globally, earlier said it would cut 2,800 jobs from its memory chip division.

It is also stopping production of televisions overseas.

Known for its televisions and electronics, including the world’s first laptop personal computer and DVD player, Toshiba has a range of other operations including power transmission and medical equipment.

One of the most damaging accounting scandals to hit Japan in recent years, the case forced Toshiba’s incumbent president and seven other top executives to resign.

The company has admitted it had inflated profits by about $1.2 billion since the 2008 global financial crisis.

Battered shares

Chief executive Masashi Muromachi pledged Monday that the company would do everything it could to “regain shareholder confidence”.

Toshiba shares have lost about half their value since worries about its financial statements cropped up earlier this year.

“I feel a deep responsibility” for this scandal, Muromachi told reporters.

Toshiba’s statement came two weeks after Japan’s market watchdog said the company should be slapped with a record $60 million fine over the scandal.

The company is also facing lawsuits from hundreds of angry investors, while Toshiba itself is suing several former executives for damages over their alleged role in the affair.

Toshiba’s business was dented by the financial crisis, while the 2011 Fukushima disaster squashed demand for atomic power at home in a big blow to the firm’s key nuclear division.

Top executives had complained of “shameful results” that could not be made public.

The accounting scandal began when securities regulators uncovered problems as they probed Toshiba’s balance sheet earlier this year.

A report by a company-hired panel released in July described a corporate culture where underlings could not challenge powerful bosses who were intent on boosting profits at almost any cost.

In a bid to beef up its corporate governance, Toshiba said earlier it would bring in more outside directors, including a former supreme court justice along with a number of well-known business leaders.

Moody’s downgraded its credit rating on Toshiba last month, saying the move “reflects our ongoing concerns over the company’s operations”.

The move came after Toshiba was booted from a stock index launched to highlight firms with the best return on equity and other shareholder-friendly criteria.

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