Toshiba Rises After President Says Profit May Beat Forecast
April 14, 2011, 6:27 AM EDTBy Mariko Yasu and Maki Shiraki
(Updates with analyst’s comments in fourth paragraph.)
April 14 (Bloomberg) -- Toshiba Corp., Japan’s biggest maker of nuclear reactors, rose to the highest level in 10 days in Tokyo trading after President Norio Sasaki said the company may beat its profit forecast.
Net income for the year ended March 31 may exceed Toshiba’s January estimate, he told reporters today in Tokyo, declining to elaborate. The stock reversed losses earlier in the day to close trading at 404 yen, a jump of 2 percent. The benchmark Nikkei 225 Average Index gained 0.1 percent.
The March 11 earthquake and tsunami in Japan, which forced manufacturers including Toshiba to shutter factories, will have a limited impact on earnings for the fiscal year just ended, Sasaki said. The company, which helped build reactors at the Fukushima Dai-Ichi nuclear station that was damaged by the disaster, is sticking with its goal of winning 39 reactor orders by 2015, he said.
“Damages from the Fukushima disaster are probably not as bad as people had expected,” said David Rubenstein, a Tokyo- based analyst at MF Global FXA Securities Ltd., who rates the stock “buy.”
Toshiba said in January it expected full-year net income of 100 billion yen ($1.2 billion), compared with a loss of 19.7 billion yen a year earlier. Revenue and operating profit may fall short of Toshiba’s January estimates, Sasaki said today.
Toshiba is expected to report net income of 94.2 billion yen for the year ended March 31, according to estimates compiled by Bloomberg. The company is set to announce its earnings outlook for the fiscal year 2011 on May 9.
Reactor Orders
Clients Toshiba approached haven’t canceled their plans to build nuclear reactors, the president said.
“There are possibilities that regulation, or design, will change in each nation. Even if we are to secure 39 contracts, there can still be delays in groundbreaking,” he said.
Toshiba may delay its target of generating 1 trillion yen in annual revenue from nuclear power plant sales by 2015, Sasaki said. The company had aimed to clear the sales target as early as 2014, he said.
“We need more time to figure out whether we can clear the target in 2015 or 2016, or it needs to be rescheduled further.”
The reactor maker may find it harder to win new contracts after Japan’s record earthquake and tsunami crippled the Dai- Ichi plant. Blasts and radiation leaks at the power station, located about 220 kilometers (135 miles) north of Tokyo, led to the evacuation of hundreds of thousands of inhabitants.
The 40-year-old power plant, equipped with six reactors, had its power and back-up generators knocked out by the tsunami that followed the 9-magnitude earthquake. A lack of power to cool reactors led to explosions and radiation leaks.
Rules for nuclear power stations need to be modified to require stronger protection against tsunamis, Sasaki said today.
The world’s second-largest maker of flash-memory chips is facing shortages of parts that may affect earnings during the six months to Sept. 30, Sasaki said. Negotiations with alternative suppliers “have progressed significantly” and Toshiba won’t likely have a big procurement problem, he said.
--Editors: Anand Krishnamoorthy, Terje Langeland
To contact the reporter on this story: Mariko Yasu in Tokyo at myasu@bloomberg.net. Maki Shiraki in Tokyo at mshiraki1@bloomberg.net
To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net
