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Toshiba posts record profit on chip unit sale, plans extra job cuts

This May 31, 2017 file photo shows the Toshiba Corp. logo at the 4th Live Entertainment EXPO Tokyo at Makuhari Messe in Chiba. (Getty/Kyodo)

TOKYO (Kyodo) -- Toshiba Corp. said Monday it posted a record net profit in the fiscal year ended March, helped by a one-off special profit from the sale of its chip unit under ongoing restructuring.

The technology conglomerate said it expects operating profit to grow nearly fourfold in the current fiscal year, as it will step up cost reduction with hundreds of additional jobs cut in the struggling semiconductor business.

Toshiba said its group net profit rose 26.0 percent to a record 1.01 trillion yen ($9.2 billion) in the year ended March 31 after selling its prized Toshiba Memory Corp. unit for 2 trillion yen to raise funds for its restructuring plans. It still retains a 40.2 percent stake in Toshiba Memory.

But group operating profit sank 58.9 percent to 35.45 billion yen last fiscal year, as group sales fell 6.4 percent to 3.69 trillion yen due partly to the sluggish energy business.

In the year through next March, group operating profit is projected to surge to 140 billion yen on a steeper cut in purchasing and personnel costs, even as group sales are expected to fall 7.9 percent to 3.4 trillion yen.

The company did not provide a net profit forecast, citing difficulty in assessing the earnings of Toshiba Memory at present, which was bought by an international consortium including U.S. private equity firm Bain Capital and South Korean chip maker SK Hynix Inc.

The company is continuing revamp efforts following an accounting fraud scandal that came to light in 2015 and the bankruptcy of its U.S. nuclear power subsidiary Westinghouse Electric Co. in 2017.

Toshiba aims to reduce its workforce by 7,000 employees over the five years to March 2024 and 823 employees left at the end of March under an early retirement program, the company said.

It is planning another 350 job cuts in the semiconductor business, which has been hit by a sharp drop in demand in China, Toshiba said.

Toshiba aims to focus more on its core energy, infrastructure and electronic device businesses, and has launched a new business to produce lithium-ion batteries for automakers.

While the company's sales are on the decline due to restructuring, it is looking to improve profitability through overhaul measures, Toshiba Chairman and CEO Nobuaki Kurumatani said.

"We would like to be one of the most profitable companies in the industry," Kurumatani said at a press conference.

The company is sticking to its goal of raising its operating profit margin to 8 percent by the year to March 2024. The margin stood at 1 percent last fiscal year.

It remains uncertain whether the company can smoothly return to a growth track as some of its restructuring plans have hit a snag.

Toshiba is aiming to sell its liquefied natural gas operations in the United States by the end of March after Chinese chemicals maker ENN Ecological Holdings Co. last month scrapped a plan to buy Toshiba America LNG Corp. for $15 million yen.

"We have launched various talks" since ENN Ecological withdrew from the deal, Kurumatani said.

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