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Toshiba's record-breaking shares drop wipes $6.5bn off company's value | |
(about 7 hours later) | |
A looming multi-billion dollar writedown has wiped more than $6bn (£4.9bn) off Toshiba’s market value in just three days in one of the worst-ever share declines for a major Japanese company. | |
Toshiba shares plunged by 17 per cent on Thursday, clocking a third day of heavy losses since the company announced that it was facing a one-time loss of several billion dollars over its US nuclear business. | Toshiba shares plunged by 17 per cent on Thursday, clocking a third day of heavy losses since the company announced that it was facing a one-time loss of several billion dollars over its US nuclear business. |
The company stocks had already lost 20 per cent on Wednesday and 12 per cent on Tuesday. | The company stocks had already lost 20 per cent on Wednesday and 12 per cent on Tuesday. |
That means the company has now had more than 40 per cent of its value wiped since 26 December, or about 800 billion yen ($6.5bn; £5.3bn). | |
Late on Wednesday, Moody's became the second rating agency to downgrade the group, pushing it deeper into "junk", or non-investment grade territory, with a Caa1 rating, from B3. | Late on Wednesday, Moody's became the second rating agency to downgrade the group, pushing it deeper into "junk", or non-investment grade territory, with a Caa1 rating, from B3. |
"Although Toshiba is still assessing the exact amount of the impairment loss, its financial metrics will likely deteriorate further, potentially resulting in a negative equity position," said Masako Kuwahara, Moody's Lead Analyst for Toshiba. | |
On Tuesday, Toshiba formally announced that costs linked to the acquisition in 2015 by Westinghouse Electric, its US subsidiary, of a nuclear company would possibly result in "several billion dollars" in charges. | |
"This will result in a negative impact on Toshiba's financial results…though the figures are still subject to determination," Toshiba said in a statement. | |
The company’s latest full-year forecast is for annual net profit of 145 billion yen ($1.24bn, £1bn), up 45 per cent from an earlier estimate. | |
However, the firm said it will release a revised earnings forecast as soon as possible to reflect the coming writedown. | However, the firm said it will release a revised earnings forecast as soon as possible to reflect the coming writedown. |
That uncertainty is fuelling investor anxiety, according to analysts. | That uncertainty is fuelling investor anxiety, according to analysts. |
“Concerns have yet to be cleared away as they said they didn’t know the figure,” Yukihiko Shimada, senior analyst at SMBC Nikko Securities, said. | “Concerns have yet to be cleared away as they said they didn’t know the figure,” Yukihiko Shimada, senior analyst at SMBC Nikko Securities, said. |
Toshiba is also still struggling to recover after it emerged in 2015 that profits had been overstated for seven years, prompting the chief executive to resign. | Toshiba is also still struggling to recover after it emerged in 2015 that profits had been overstated for seven years, prompting the chief executive to resign. |
Additional reporting by agencies | Additional reporting by agencies |
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