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Shares slide as Toshiba misses earnings deadline

Shares in Toshiba fell more than 8 per cent as the troubled Japanese conglomerate missed its earnings deadline once again.

The company on Tuesday confirmed that it has sought another extension to the deadline by which it must submit audited third-quarter earnings, amid uncertainty about the true extent of crisis at its US nuclear unit Westinghouse.

The stock was down 8.1 per cent at ¥197.5 near midday in Tokyo.

In a statement Toshiba said it was applying for 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 purchased in 2015.

If Toshiba’s latest request to extend the deadline to April 11 is not accepted by the Ministry of Finance division in charge, the company will have until March 27 to report results or face delisting from the Tokyo Stock Exchange.

The company — which suffered a $1.3bn accounting scandal in 2015 — saw its future once again thrown into doubt after it revealed 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 third quarter. It added it has not yet found evidence that would require revision of the parent’s consolidated earnings “for now”.

The Japanese company also faces a second deadline on Wednesday that requires it to submit a report to indicate it has improved its internal controls after its 2015 accounting scandal.

Analysts say convincing regulators that it has improved its internal governance will be extremely challenging given lingering questions over Westinghouse’s accounts.

Toshiba could be demoted to the Tokyo Stock Exchange’s second section for small-cap stocks if it is 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 be delisted.

Via FT