News Column

Toshiba Forecasts Record Profit on Chips, Grid

May 8, 2014

Baystreet Tech Insider (Canada)

Toshiba MSX-ENGINE2 ver.A for MSX2,MSX2+ (Yaca2671, Creative Commons)
Toshiba MSX-ENGINE2 ver.A for MSX2,MSX2+ (Yaca2671, Creative Commons)

Japan's Toshiba Corp forecast operating profit to climb 14% to a record this business year, as buoyant sales of power grid equipment and robust income from flash memory chips offset weakness in its nuclear reactor business.

Increased demand for power distribution systems and railroad network equipment is expected to help profit at its energy and infrastructure unit double. While income from semiconductors is expected to fall, it will still account for more than half of operating profit.

Toshiba, a leading supplier of flash memory chips used in smartphones and tablet computers, predicted operating income of 330 billion yen ($3.2 billion U.S.) in the year ending March 31, also boosted by an expected rebound in consumer appliances such as TVs and computers.

The guidance, however, fell short of an average estimate of 355 billion yen from 22 analysts surveyed by Thomson Reuters. In the business year just ended, it posted an operating profit of 291 billion yen, 47% higher than the previous year.

Toshiba's power grid business is set to be in focus after the Nikkei business daily said the Japanese conglomerate will offer to buy Alstom's power grid unit if General Electric Co purchases the French firm's energy business.

Alstom, which is reviewing GE's offer, has given Germany's Siemens AG until the end of May to make a rival bid.

The earnings gains come despite a slump for its nuclear power operations. Toshiba, which in 2006 bet big on a revival in nuclear power with the acquisition of pressurized reactor builder Westinghouse, has struggled to win business since the 2011 Fukushima disaster.

On Wednesday, the firm wrote down more than $300 million U.S. on the value of its 10% stake in Nuclear Innovation North America, a company planning to build two new reactors at the nuclear plant in Texas because of uncertainty over regulatory approval of the project.

But China may soon provide a boost as it may sign as early as next year the first of several contracts for eight new nuclear reactors from Westinghouse Electric Co. The eight projects, including machinery and services, are expected to cost $24 billion U.S.

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Original headline: Toshiba sees record profit


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