A looming multi-billion dollar writedown has wiped more than $6bn off Toshiba’s market value in just three days in one of the worst-ever share declines for a major Japanese company.
Toshiba shares plunged by 17 per cent on Thursday, clocking a third day of heavy losses since the company announced that it was facing a one-time loss of several billion dollars over its US nuclear business.
The company stocks had already lost 20 per cent on Wednesday and 12 per cent on Tuesday.
This means the company has now had more than 40 per cent of its value wiped since December 26 or about 800 billion yen ($6.5bn; £5.3bn).
Late on Wednesday, Moody's became the second rating agency to downgrade the group, pushing it deeper into "junk", or non-investment grade territory, with a Caa1 rating, from B3.
"Although Toshiba is still assessing the exact amount of the impairment loss, its financial metrics will likely deteriorate further, potentially resulting in a negative equity position" said Masako Kuwahara, Moody's Lead Analyst for Toshiba.
On Tuesday, Toshiba formally announced that costs linked to the acquisition in 2015 by Westinghouse Electric, its US subsidiary, of a nuclear company would possibly result in "several billion dollars" in charges.
Fall from grace.. Toshiba shares very close to wiping out gains for 2016. Share price was up 80% before Christmas; now virtually back to 0 pic.twitter.com/aupJ6BrwwN
— David Ingles (@DavidInglesTV) December 29, 2016
"This will result in a negative impact on Toshiba's financial results…though the figures are still subject to determination," Toshiba said in a statement.
The company’s latest full-year forecast is for annual net profit of 145bn yen ($1.24bn), up 45 per cent from an earlier estimate.
However, the firm said it will release a revised earnings forecast as soon as possible to reflect the coming writedown.
That uncertainty is fuelling investor anxiety, according to analysts.
“Concerns have yet to be cleared away as they said they didn’t know the figure,” Yukihiko Shimada, senior analyst at SMBC Nikko Securities, said.
Toshiba is also still struggling to recover after it emerged in 2015 that profits had been overstated for seven years, prompting the chief executive to resign.
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