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Toshiba logs surprise quarterly operating loss on higher materials costs

The logo of Toshiba Corp. sometimes appears at the business’s facility in Kawasaki, Japan June 10, 2021. REUTERS/Kim Kyung-Hoon

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TOKYO, Aug 10 (Reuters) – Toshiba Corp (6502.T) on Wednesday posted an urgent operating loss in the initial quarter since it grappled with a sharp rise in logistics and raw material costs in addition to a global chip shortage.

Chief Financial Officer Masayoshi Hirata told reporters that the conglomerate’s first quarterly loss in 2 yrs came amid jumps in charges for steel, copper along with components sourced from suppliers.

“We’ve been in a position to only offset about 50 % the impact of higher materials and logistics costs with price hikes,” he said.

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Its 4.8 billion yen ($35.6 million) loss in April-June compares with a profit of 14.5 billion yen per year earlier and a Refinitiv consensus estimate for a 19.4 billion yen profit. Analysts had expected the conglomerate to benefit more from weakness in the yen.

Low margins for power-related projects also weighed on its earnings even though Toshiba makes some forms of semiconductors, it requires to procure other styles found in its electronics along with other products from elsewhere.

Toshiba, however, stuck using its annual profit forecast for a 7% rise to 170 billion yen, saying it aims to spread more costs in product prices.

The scandal-laden Japanese industrial conglomerate, that is exploring going private along with other options, last month selected Bain Capital, CVC Capital Partners, Brookfield Asset Management and a consortium involving state-backed Japan Investment Corp and private equity firm Japan Industrial Partners to check out another bidding round. read more

A buyout of Toshiba could value the firm at just as much as $22 billion, sources have previously told Reuters.

Tensions between Toshiba and its own activist investors culminated this past year whenever a shareholder-commissioned investigation concluded management had colluded with Japan’s trade ministry – which sees the business’s nuclear and defence technology as a strategic asset – to block overseas investors from gaining influence at its 2020 shareholder meeting.

This season, shareholders rejected management-backed plans to split the business in two, prompting Toshiba to restart its strategic review.

In further news that reflects poorly on its oft-criticised governance problems, Toshiba also said on Wednesday it had discovered that a worker of a U.S. subsidiary, functioning on fraudulent instructions from the third-party, had transferred $3.6 million to a bank-account in Hong Kong. The case happens to be under investigation.

($1 = 134.98 yen)

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Reporting by Makiko Yamazaki; Editing by Edwina Gibbs

Our Standards: The Thomson Reuters Trust Principles.

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