Toshiba shares slump on accounting probe

TOKYO - Toshiba shares plunged on Monday after the Japanese conglomerate withdrew its earnings forecast and said it won't pay a dividend, citing accounting problems on a number of infrastructure projects.

The company faced massive selling at the start of trading with the stock tumbling to the day's limit low of 403.3 yen (S$4.49), down 16.55 per cent.

Shortly after the Tokyo market closed on Friday, Toshiba announced it had cancelled its projection for a 120 billion yen (US$1.0 billion) net profit on sales of 6.7 trillion yen in its latest fiscal year to March.

The vast engineering conglomerate, which makes everything from batteries to nuclear reactors, also warned it may revise past earnings.

Toshiba said it would hire an outside team of experts to look into the matter after finishing an internal investigation.

So far, the probe revealed that Toshiba underestimated the cost of "certain" infrastructure projects along with other accounting irregularities, it said in a statement without elaborating.

The company added that it won't report revised fiscal-year results until at least next month.

"This is unlikely to affect Toshiba's profitability but it damaged investors' trust," said Mitsushige Akino, an executive officer at Ichiyoshi Investment Management in Tokyo.

"The stock dropped mainly because of the uncertainty since the actual losses are not known. This selling will probably continue until Toshiba clarifies the situation." A Toshiba spokeswoman told AFP on Monday that "several construction projects have understated costs".

The extent of the problems - and who was responsible for them - were not yet clear, she added.

"The investigation include power systems, social infrastructure and community solutions units," the spokeswoman said, referring to its energy, rail and air traffic control services, and an urban infrastructure division.

Toshiba's embarrassing roll-back comes after its nine-month net profit surged 86 per cent from a year earlier to 71.9 billion yen, thanks to strong sales in the energy and infrastructure business, which includes nuclear power plants, as well as electronic devices, including memory chips.

Earlier this year, Toshiba said it was getting out the North American television business and selling its brand in the market to a Taiwanese manufacturer.

The firm pointed to slowing TV sales for the decision to stop development and sales of televisions in North America.

Japan's TV makers, also including Sony and Panasonic, have suffered as razor-thin margins and fierce overseas competition, particularly from South Korean and Taiwanese rivals, dented their bottom line.