Following a damaging accounting scandal that resulted in Toshiba Corp posting nearly $ 7 billion in losses last year, the company announced they expected to deliver a profit for 2016.
The scandal, which the company announced it was investigating last May, resulted in the immediate resignation of the CEO Hisao Tanaka and was called “the most damaging event for our brand in the company’s 140-year history.” Thousands of other employees lost their jobs and the company had to sell off large chunks of its business.
The multinational conglomerate, founded in 1938, is looking to streamline its operations and will focus more heavily on the nuclear and social sectors, and electronic chips.
David Knightley, Head of Institutional Equities, Trading and Research at Monex BMO Securities commented on the move by the company in an email to clients. “The chip market fluctuates more than the average area and the nuclear sector is far from stable after what happened at Fukushima. We expect Toshiba will look to increase its capital base to offset these factors. Having said that, the company is now making money again and this is the most important sign for investors.”
The company has struggled to raise capital through the usual methods since September 2015 when it was placed on a Tokyo Stock Exchange watch list after questionable internal controls were cited.
Toshiba CFO Masayoshi Hirata said in a press statement, “Capital gains will come in time. We will wait patiently for more favourable conditions.”
Onlookers have commented that Toshiba will need to look for other ways to develop growth after it was forced to offload its medical equipment operations to Chinese appliance company Midea Group Ltd.
A severe downturn is also expected in Toshibas memory chip operations following declining global smartphone and tablet demand which could result in a drop from about 105 billion yen last year to around 20 billion this financial term.
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