Toshiba flags huge H1 operating loss after accounting scandal

  • Toshiba to announce first-half results on Saturday
  • Company says loss "roughly as reported" by media
  • Nikkei reported six-month operating loss of 90 bln yen

TOKYO: Japan's Toshiba Corp signalled on Thursday that it expects to book a large first-half operating loss as it struggles to recover from a $1.3 billion accounting scandal, fueling concerns that it may need a more drastic restructuring.

The grim outlook also adds pressure on the embattled electronics maker to decide whether to sue former management for negligence over accounting practices in a bid to avoid lawsuits from angry shareholders.

Toshiba said its operating loss would be roughly in line with the 90 billion yen ($741.11 million) loss the Nikkei business daily said it would book in a report earlier on Thursday, and that it planned a 70 billion yen writedown for one of its subsidiaries. It will release detailed first-half results on Saturday.

Toshiba shares closed down 3.4 percent, compared with a 1.0 percent gain in the benchmark Nikkei index.

In an effort to emerge from the scandal, the laptops-to-nuclear power conglomerate said in late October that it had agreed to sell its image sensor business to Sony Corp and overhaul its semiconductor business.

But Toshiba has a long road ahead as its accounting irregularities padded profits across a wide range of its businesses. It is expected to announce more restructuring steps, in such unprofitable areas as home appliances and personal computers, later this month.

Sources close to the matter have said Toshiba is also considering suing former executives, including three former chief executives, over the accounting practices.

An independent panel investigating the former executives' role, if any, in the scandal is expected to make recommendations as early as next week.

It is rare for Japanese companies to sue former executives unless they are deemed to have been acting for personal greed.

"Lawsuits against former executives are expected to increase as Japan pushes companies to strengthen corporate governance," Kengo Nishiyama, senior strategist at Nomura Securities Co, said.

"Tougher action will be increasingly called upon when decisions by former executives are found to hurt their companies."

Concerns about Japanese bookkeeping practices deepened on Wednesday when automotive parts maker Akebono Brake Industry Co said it discovered a case of inappropriate accounting and delayed the filing of its quarterly results.

($1 = 121.4400 yen)