Reeling from a $1.3 billion accounting scandal, Toshiba will post a record net loss this year and cut around 5% percent of its workforce as it focuses on semiconductors and nuclear energy.
The Tokyo company has been restructuring in the wake of the disclosure that it overstated profits by more than 150 billion yen over seven years. On Monday, Toshiba said the restructuring will push its loss for the year through March to about 550 billion yen ($4.53 billion), far worse than at the height of the global financial crisis.
“By implementing this plan, we would like to regain the trust of all stakeholders and transform ourselves into a robust business,” Chief Executive Masashi Muromachi told a news conference.
Toshiba will cut 6,800 consumer electronics jobs, taking the total this year beyond 10,000. It will also sell its Indonesian TV assembly plant, effectively exiting overseas TV production.
Analysts warned, however, that the streamlining of Toshiba’s operations may not return the company to dominance amid falling profit margins in the chip industry and a nuclear phase-out in developed countries since the 2011 Fukushima disaster.
“Toshiba said it will focus on chips but it will take time for profit to regrow,” analyst Hideki Yasuda of Ace Research Institute told Reuters. Profitability at Toshiba’s nuclear business including U.S. subsidiary Westinghouse is also a concern, he said.
Toshiba last month said Westinghouse wrote down assets by $1.3 billion over the 2012 and 2013 business years. Analysts have also said Westinghouse faces increasing competition from Chinese and Russian builders of cheaper reactors.
Toshiba’s semiconductor division is profitable and leads the NAND-flash memory chip market along with SanDisk Corp and Samsung, Reuters said. But margins have fallen as smartphone sales slowed.
Toshiba attributed the forecast loss to 260 billion yen in restructuring costs. Sales are projected to decline 6.8% to 6.2 trillion yen.
“Toshiba had tried to make everything look good, but once the truth came out it was a company in tatters,” Yasuo Imanaka, an analyst at Rakuten Securities, told the Financial Times. “Does it really have a business that is significantly profitable?”