Photo: REUTERS file

Toshiba to shed assets, cut 7,000 jobs over 5 years

By Makiko Yamazaki

Toshiba Corp is liquidating its British nuclear power unit and selling its U.S. liquefied natural gas (LNG) business, as the once-mighty industrial conglomerate seeks to unload troubled assets and regain investors' confidence.

The plans are part of a new five-year business strategy Toshiba announced on Thursday, which also included 7,000 job cuts, or 5 percent of its workforce, over five years.

The company's shares surged as much as 13.7 percent to near two-year highs after the announcement, helped also by a much anticipated move to repurchase up to 40 percent of its own shares starting Friday. They closed 12.7 percent higher.

Toshiba has been trying to win back the market's trust after a 2015 accounting scandal uncovered widespread irregularities at the laptops-to-nuclear conglomerate for years.

The scandal forced it to recognize huge cost overruns at now-bankrupt U.S. nuclear unit Westinghouse, prompting it to sell its prized memory chip unit earlier this year to a consortium led by U.S. private equity firm Bain Capital and leaving it with few growth businesses.

"There had been reports about a possibility of selling non-performing business and job cuts so such moves had been expected at some point. But investors are taking heart," said Hiroyuki Fukunaga, chief executive of Investrust, a financial advice firm.

"The share buyback announcement worth up to 40 percent of outstanding shares is definitely positive, too."

Toshiba had already promised a share buyback of 700 billion yen earlier this year, but the timing had been undecided. Its announcement on Thursday appeared to outweigh a weaker profit forecast - the company said it now expects a full-year operating profit of 60 billion yen rather than a previous estimate of 70 billion yen.

Toshiba has been trying to shed troubled assets that could have exposed the Japanese company to future losses.

The decision to liquidate NuGen, however, would be a blow to Britain's plans to build a nuclear plant that was meant to provide 7 percent of the country's electricity. Reuters was the first to report last month that Toshiba was considering liquidating NuGen.

South Korea's state-run Korea Electric Power Corp (KEPCO) has been in talks with Toshiba to buy a stake in NuGen. South Korea's energy ministry said on Thursday it will closely coordinate with the British government on the NuGen project, while monitoring the liquidation process with KEPCO.

On the LNG project, Toshiba said the buyer is China's ENN Energy Holdings. It will be paying ENN $800 million to assume its commitment to purchase 2.2 million tons per year of the fuel from Freeport LNG in Texas.

The company has spent years trying to either sell the gas to power customers or offload the business after signing the 20-year contract to buy LNG from Freeport.

© (c) Copyright Thomson Reuters 2018.

©2018 GPlusMedia Inc.

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Blame China

-2 ( +1 / -3 )

helped also by a much anticipated move to repurchase up to 40 percent of its own shares

Come again? How do you buy something you already own again?

-2 ( +1 / -3 )

It’s “own” meaning “Toshiba” in name shares?

0 ( +0 / -0 )

Best prospect for Toshiba is nuclear power plant decommissioning; starting here. They should keep NuGen.

0 ( +0 / -0 )

Toshiba has been going down the type for quite a while now, wouldn’t touch their shares with a barge pole, would want to see some evidence the turn around plan was working first. Share buyback? If it has enough spare cash sloshing around it should increase the dividend not boost the remuneration packages of its senior staff by unnaturally boosting the short term share price with shareholders money.

0 ( +1 / -1 )

Kenji Fujimori, you sure can blame China but the root of the problem is Abe's anti-China policy in the past 5 years. High technology is very expensive business, if there is no market for it, it means die. Because Abe forbid Japanese doing business with China, as a consequence, companies lost investments, lack of returns. A best example was google getting out of China a few years ago, now it wants back. What a wasted time and money. I am glad Abe changed his attitude toward China, but the cost of learning is too expensive.

-4 ( +0 / -4 )

"Come again? How do you buy something you already own again?"

But, why? Oh, why Dalila?

The level of experts’ ignorance on this site is astonishing sometimes; actually most of the time.

It's called SHARES BUY BACK.

Companies do it ALL OVER THE WORLD!!!!

0 ( +0 / -0 )

Well so much for retirement pension as their goes my job. So close to paying off mortage and 2 kids heading to college and one on the way...hmmmm...

0 ( +0 / -0 )

Come again? How do you buy something you already own again?

They don't own them. That's the point - they want to, hence, they buy them back. AKA a "buyback", as it were.

0 ( +0 / -0 )

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