Financial meltdown leaves doubts over Toshiba’s survival
Company reports huge loss during last three months of 2016 adding to concerns over Moorside nuclear project
Toshiba has warned there is “substantial doubt” over its continued survival after reporting a ¥576 billion (£4.2 billion) operating loss in the last three months of 2016.
The company said the loss could rise to more than ¥1 trillion (£7.3 billion) over the full financial year, adding to concerns over its Moorside nuclear development near Sellafield.
After twice delaying the publication of its third quarter figures, Toshiba released the results with a disclaimer saying they had not yet been audited. The loss was the result of a ¥717 billion write-down (£5.2 billion) on the acquisition of nuclear construction company CB&I Stone & Webster by Toshiba’s US nuclear arm Westinghouse.
The write-down followed huge cost overruns and lengthy delays at two nuclear plants being built by CB&I Stone & Webster in the US. Toshiba revealed it may have to pay out up to ¥650 billion (£4.8 billion) in compensation to the plants’ operators.
Following a series of setbacks, the latest news has cast yet more doubt over the future of the Moorside nuclear project. Toshiba bought a 60 per cent in the NuGen consortium developing the plant in 2014, including 10 per cent from French firm Engie.
Moorside was due to be powered by three of Westinghouse’s AP1000 reactors but that is now uncertain after the company filed for bankruptcy protection last month. Toshiba says it is considering selling a majority stake in Westinghouse to strengthen its balance sheet.
Shortly afterwards Engie decided to offload its remaining 40 per cent interest in the NuGen consortium to Toshiba by invoking a contractual right to transfer its stake in the event of a default, meaning Toshiba will soon be left as the sole shareholder.
A NuGen spokesman said Toshiba remains committed to Moorside in spite of its financial difficulties. He said the company will take no role in construction and will sell its stake once the plant is built as has always been the plan.
However, talks have also been held to try and secure investment from South Korea's state-owned utility Kepco. Toshiba said in a statement: “No details have been decided yet but we would like to explore alternatives, including sales of the shares, while carefully monitoring the situation in consultation with other stakeholders including the British government.”
Tim Yeo, former energy minister and now chairman of New Nuclear Watch Europe, recently told Utility Week he does not expect Kepco to invest in the project without some sort of public financing. He also said the utility will be keen to use its own reactor technology, which would mean years of delays whilst its reactor design undergoes a generic design assessment.
The GMB union, which represents workers in the nuclear industry, described the current situation as a “monumental cock-up”.
National secretary Justin Bowden said the “ridiculous pantomime” around Toshiba and its involvement in the project provided an “abject lesson to any government of any political persuasion as to why foreign companies and foreign investors should not be left with the responsibility of keeping the county’s lights on and economy working.”
“As monumental cock ups go it’s hard to imagine a worse energy related one in recent times”, he added. “The key question now is what the hell the UK government is doing to take control of the situation?”
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