Toshiba’s quarterly profit fell 88%

The Japanese company Toshiba published data following the results of the third quarter and nine months of the current financial year and announced the resignation of the chief operating officer. Toshiba’s third-quarter operating profit fell 87.5% to ¥5.3 billion ($40.4 million), much worse than analysts’ forecasts. According to the results of nine months, operating profit amounted to $61 million, while a year earlier for the same period this figure reached $663 million.

Behind the weak results is a sharp decline in demand for products from some of Toshiba’s divisions, especially the hard drive division, due to the economy and consumer austerity in a recession, as well as chip shortages. In addition, Toshiba wrote off $77 million due to the fall in the share price of its Toshiba TEC unit. Considering the situation, the company lowered – for the second time in several months – its operating profit forecasts for the entire fiscal year ending in March. Now Toshiba forecasts this figure at $720 million, while previously expected $946 million.

The resignation of the chief operating officer was another piece of negative news. Goro Yanase resigned after an audit revealed that in 2019, as a member of the management of one of the divisions, he regularly applied for reimbursement of expenses for entertainment events, but did not indicate the names of those who participated in them in the documents. This violates the requirements of the company. Mr. Yanase’s successor has not yet been chosen.

Established 146 years ago, Toshiba has been plagued by numerous problems and scandals over the past 10 years. After scandal with financial statements in 2015 and problems with the American division of Westinghouse Electric in 2017, Toshiba changed management and launched a large-scale restructuring. The measures taken allowed the company to return to profit.

A year ago, Toshiba received offer about the purchase from the investment fund CVC Capital Partners. The volume of the transaction could be about $20 billion. However, the transaction did not take place, as the board of directors “decided to abandon it.” In February of this year, the corporation unveiled plans division into two companies as part of strategic development and with the aim of restoring sales that have fallen in recent years. However, Toshiba shareholders do not supported these leadership plans. The company then put itself up for sale. Last week, a consortium of companies led by Japan Industrial Partners, a private equity firm, presented its proposal. Financial details of the offer were not disclosed. Its terms must first be approved by Toshiba’s board of directors and activist shareholders.

Toshiba shares fell 0.42% on the Tokyo Stock Exchange today. Over the past six months, the company’s shares have fallen in price by 14%.

Alena Miklashevskaya