Toshiba Corp. President Masashi Muromachi Attends Earnings News Conference
Masashi Muromachi, outgoing CEO of Toshiba Photograph by Kiyoshi Ota — Bloomberg via Getty Images

Toshiba Takes $2.3 Billion Writedown on U.S. Nuclear Unit Westinghouse

Apr 26, 2016

Japan's Toshiba said on Tuesday that it booked an impairment charge of $2.3 billion for the past financial year on U.S. nuclear unit Westinghouse, a much-anticipated move to address lingering doubts over its book-keeping.

The 260 billion yen writedown is a reversal of Toshiba's long-time refusal to mark down the 330 billion yen goodwill value of Westinghouse despite a deterioration in the nuclear business since the 2011 Fukushima disaster. Toshiba bought Westinghouse in 2006 for $5.4 billion.

Investors have said that concerns over the value of the business have been a major reason behind the lack of recovery in Toshiba's share price following a $1.3 billion accounting scandal last year.

The shares closed at 241.9 yen on Tuesday, still worth less than half of their value before the company first disclosed cases of accounting irregularities around a year ago.

The laptops-to-nuclear conglomerate said the reversal was prompted by its weaker debt-financing abilities for nuclear projects after the scandal led to a business overhaul and a slew of credit-rating downgrades.

Chief Executive Masashi Muromachi, however, dismissed suggestions that the nuclear division was in trouble. Many countries have frozen nuclear energy expansion plans in recent years, especially in the aftermath of the Fukushima disaster.

"Regardless of the writedown, the nuclear business is progressing as planned," he said at a press conference.

Despite the Westinghouse charge, Toshiba (tosyy) raised its earnings estimates for the year ended in March as it booked a pretax profit of 590 billion yen from the sale of a medical equipment division to Canon using an unusual method to get cash before the deal gained regulatory approval..

It now forecasts a net loss of 470 billion yen, smaller than a 710 billion yen loss estimated earlier. The company will release its results on May 12.

Toshiba is also in final talks to replace Muromachi in June. Muromachi took over the company last July after his predecessor and a slew of other top executives resigned for their roles in the scandal.

"The nomination committee is currently discussing the CEO selection," Muromachi said at the press conference. "It will make a final decision probably after the Golden Week holiday (that ends early May)."

A source has told Reuters that Senior Executive Vice President Satoshi Tsunakawa was a leading candidate, noting that he was not embroiled in the scandal.

Tsunakawa is credited for having increased earnings at the medical equipment unit.

All products and services featured are based solely on editorial selection. FORTUNE may receive compensation for some links to products and services on this website.

Quotes delayed at least 15 minutes. Market data provided by Interactive Data. ETF and Mutual Fund data provided by Morningstar, Inc. Dow Jones Terms & Conditions: http://www.djindexes.com/mdsidx/html/tandc/indexestandcs.html. S&P Index data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Terms & Conditions. Powered and implemented by Interactive Data Managed Solutions