Toshiba Predicts Record-Breaking $4.5bn Loss

Toshiba will cut thousands of jobs as the fallout from its recent financial scandal looks set to cause it a record losses at the company.

The troubled Japanese firm made the announcement alongside dire predictions for its next set of financial results, which could see the company be as much as $4.5bn (550bn yen, £3.02bn) out of pocket.

Toshiba has endured a series of struggles in recent months following claims it overstated profits for six years, an event which led to the resignation of its President and vice-president.

All change

The 6,800 job losses, around 3.5 percent of its total 200,000 global workforce and 30 percent of the division’s total, will come in Toshiba’s consumer electronics ‘Lifestyle’ division, with the cuts to be made by March 31 2016, the company said, with many workers based in Japan being offered early retirement.

Toshiba will also be selling its TV and washing machine manufacturing plant in Indonesia to Hong Kong-based TV maker Skyworth as part of its restructuring, which will also involve finding new investors for its healthcare business.

The sale follows the loss of Toshiba’s semiconductor business, which was acquired by Sony back in October. The deal, which will see Sony set up a new subsidiary called Sony Semiconductor Corporation, sees the company snap up Toshiba’s sensor factory and staff.

Also on the board is a shrinking of the company’s television manufacturing business in the US and Japan, and a spin-off of its Personal & Client Solutions PC business, which will merge with an existing Toshiba sales company in April 2016 in order to ‘improve efficiency’.

“By implementing this plan, we would like to regain the trust of all stakeholders including shareholders and transform ourselves into a robust business,” an official company statement said.

Annus horribilis

Toshiba’s troubles begin back in May, when the company launched an official probe which discovered that it had overstated operating profits by a total of 151.8 billion yen (£780m), roughly triple the figure Toshiba had initially estimated.

Company CEO Hisao Tanaka was also found to have been aware of a profit inflation scheme going back to 2008, leading to his resignation following the release of an independent inquiry findings.

The following financial fallout hit the firm hard and in September it posted a full year net loss of $318m (£209m) after a delay caused by the scandal and the sale of another unit in an effort to improve its finances.

And in a final disgrace, earlier this month, the Japanese securities watchdog recommended that it be fined a record 7.37 billion yen (£39.7m).

The scandal has prompted Japanese Prime minister Shinzo Abe to introduce new guidelines to improve corporate governance.

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