Toshiba applies to extend to earnings deadline

Toshiba has missed its earnings deadline once again.

Shares have fallen more than 6 per cent after the troubled Japanese conglomerate confirmed that it has sought another extension to submit its audited third-quarter earnings amid uncertainty about the true extent of crisis at its US nuclear unit Westinghouse.

In a statement, Toshiba said it sought the extension after an internal investigation by lawyers confirmed that some Westinghouse executives exerted “inappropriate pressure” over the accounts of Stone & Webster, a US nuclear construction company that was purchased in 2015.

If Toshiba’s latest deadline extension request until April 11 is not accepted by the Ministry of Finance division in charge, it will have until March 27 to report the financial results or face delisting.

The company – which suffered a $1.3bn accounting scandal in 2015 – saw its future once again thrown into doubt after Toshiba said last month that it planned to book a $6.3bn writedown on its US nuclear business.

Westinghouse’s problems stem primarily from large cost overruns and delays relating to the construction of nuclear power plants in Georgia and South Carolina in the US.

Toshiba said it will need another four weeks to examine S&W’s accounts beyond the latest third quarter. It added it has not yet found evidence that will require revision of the parent’s consolidated earnings “for now”.

The Japanese company also faces a second deadline tomorrow that requires the Toshiba to submit a report to show that it has improved its internal controls after its first accounting scandal. Analysts say convincing regulators that it has improved its internal governance will be extremely challenging amid lingering questions over Westinghouse’s accounts.

Toshiba could be demoted to the Tokyo Stock Exchange’s second section for small cap stocks if it was in negative equity by the end of its financial year on March 31.

That is very likely to be the case if the company does not manage to rapidly complete the sale of its prized NAND flash memory business, which is valued at as much as $20bn. If the company remains in negative equity value for two straight fiscal years, it could also be delisted.