Toshiba posts surprising quarterly operating loss as costs rise

The Toshiba Corp logo. is seen at the company’s premises in Kawasaki, Japan June 10, 2021. REUTERS/Kim Kyung-Hoon

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TOKYO, Aug 10 (Reuters) – Toshiba Corp (6502.T) reported an unexpected first-quarter operating loss on Wednesday as it grappled with a sharp rise in logistics and raw material costs as well as a global chip shortage.

Chief Financial Officer Masayoshi Hirata told reporters that the conglomerate’s first quarterly loss in two years came amid soaring prices for steel, copper and components from suppliers.

“We were only able to offset about half of the impact of rising material and logistics costs with price increases,” he said.

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Its loss of 4.8 billion yen ($35.6 million) in April-June compares with a profit of 14.5 billion yen a year earlier and a Refinitiv consensus estimate for a profit of 19, 4 billion yen. Analysts expected the conglomerate to benefit more from the weaker yen.

Low margins on energy-related projects have also weighed on its profits, and although Toshiba makes some types of semiconductors, it must source other types used in its electronics and other products elsewhere.

Toshiba, however, stuck to its full-year profit forecast for a 7% rise to 170 billion yen, saying it aimed to pass on more costs to product prices.

The scandal-laden Japanese industrial conglomerate, which is considering going private and other options, last month selected Bain Capital, CVC Capital Partners, Brookfield Asset Management and a consortium involving state-backed Japan Investment Corp and the private equity firm Japan Industrial Partners to conduct a second round of bidding. Read more

A takeover of Toshiba could value the company up to $22 billion, sources told Reuters.

Tensions between Toshiba and its activist investors came to a head last year when a shareholder-commissioned inquiry found that management was colluding with Japan’s Ministry of Commerce – which views the company’s nuclear and defense technology as a strategic asset – to prevent foreign investors from gaining influence at its 2020 shareholders’ meeting.

This year, shareholders rejected management-backed plans to split the company in two, prompting Toshiba to relaunch its strategic review.

In other news that misrepresents its oft-criticized governance issues, Toshiba also said on Wednesday it discovered that an employee of a U.S. subsidiary, acting on fraudulent instructions from a third party, transferred $3.6 million to a bank account in Hong Kong. Kong. The matter is currently under investigation.

($1 = 134.98 yen)

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Reporting by Makiko Yamazaki; Editing by Edwina Gibbs

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