Shared from the 2017-02-15 The Atlanta Journal-Constitution eEdition


Toshiba woes include Georgia nuke project

If the company’s troubles lead to further delays, Georgia Power or its customers could bear the cost.

TOKYO — Toshiba Corp.’s chairman resigned Tuesday after the company logged such massive losses in its nuclear business — which includes the Plant Vogtle project in Georgia — that it must sell its lucrative computer-chip business to avoid going belly-up.

The company projected a 712.5 billion yen ($6.3 billion) loss for nuclear business related to the acquisition of CB&I Stone & Webster by its U.S. nuclear unit Westinghouse. The company also said it will not take on new projects to construct nuclear plants.

Westinghouse is a major contractor on work now underway to add two new reactors at Plant Vogtle, near Augusta.

Georgia Power and its parent, Southern Co., have previously told the AJC they are monitoring the situation and will hold Toshiba and Westinghouse to their contracts. But if Toshiba’s troubles lead to further delays and overruns on the project, it could set up a decision by state regulators on whether Georgia Power or customers bear the cost.

Georgia Public Service Commissioner Tim Echols on Tuesday said ratepayers shouldn’t worry. He said a “fixed and firm” agreement with Westinghouse protects Georgians from a large majority of overruns.

“We expect Westinghouse to honor the agreement and finish the units,” he told the AJC.

In Tokyo, Toshiba President Satoshi Tsunakawa said the company is looking for potential partners to acquire a stake in Westinghouse. He bowed deeply at a news conference to apologize for “troubling investors and stakeholders.”

Earlier Tuesday, Toshiba delayed reporting its official financial results by a month, citing auditing problems. That sent Toshiba stock tumbling 8 percent in Tokyo trading. After the market closed, it released unaudited numbers, warning they may change “by a wide margin.”

The company said board chairman Shigenori Shiga will step down effective Wednesday, but will stay on as a Toshiba executive.

Toshiba said its net worth was minus 191 billion yen ($1.7 billion) by the end of last year. The company hopes to fix that by the end of March by selling its flash-memory business and other assets.

Tsunakawa told reporters the company viewed its move into the nuclear sector by acquiring Westinghouse in 2006 as a misstep.

Westinghouse’s purchase in 2015 of CB&I Stone & Webster, a nuclear construction and services business, was aimed at winning more business in decontamination, decommissioning and plant projects. But it just amplified that problem.

At the Vogtle project, for instance, a settlement of disputes between Georgia Power and contractors shifted much of the project’s risks onto the Toshiba subsidiary.

The company said it will reorganize its nuclear business to be directly under Tsunakawa for stricter monitoring.

It will also focus on reactor maintenance, the nuclear fuel business and decommissioning of the Fukushima nuclear plant in Japan, where reactors went into multiple meltdowns after the March 2011 earthquake and tsunami.

Efficiency moves expected at CB&I Stone & Webster never played out, resulting in a huge overvaluation of the company’s worth that led to the huge losses. Toshiba denied it had purposely covered up the problems.

Toshiba forecasts a group net loss of 390 billion yen ($3.43 billion) for the full year through March 31, instead of the 145 billion yen profit it had anticipated earlier.

Founded in 1875, Toshiba employs about 190,000 people and used to be one of the most respected brands of Japan Inc. It still has a sprawling business spanning household appliances, railways, hydrogen energy and elevator systems.

The company has grappled in recent years with a scandal over company officials’ doctoring of accounting books to meet unrealistic profit targets.

“It is so unfortunate that this has happened,” said Ryoji Sato, a company director, when asked by a reporter about the company’s promises to come clean. “We must keep trying to do better.”

Staff writer Greg Bluestein contributed to this report.

See this article in the e-Edition Here