Toshiba Corp.'s latest move in considering selling off its liquefied natural gas business in the United States highlights the company's future course of avoiding the risk of retaining highly volatile businesses.
As it is feared that the LNG business will incur huge losses in the future, it may become a source of anxiety for Toshiba, which is trying to reconstruct its business after finally emerging from a financial crisis.
At Wednesday's press conference to announce the company's latest financial statements, Masayoshi Hirata, Toshiba's corporate executive vice president and chief financial officer, did not rule out the possibility of selling the LNG business, saying, "We're exploring what is the best for the company from a long-term perspective."
Regarding the LNG business, Toshiba is so far estimated to suffer a loss of up to about 1 trillion yen. However, if the company sells the business at an early date, it is expected to be able to reduce the losses to around 100 billion yen to 200 billion yen, according to sources.
In June, Toshiba completed the sale of its profitable semiconductor memory unit, Toshiba Memory Corp., and the company's financial situation has since drastically improved. As a result, Toshiba is believed to have judged its financial situation would not worsen even if the company suffers losses due to the sale of its LNG business.
Toshiba plunged into a financial crisis due to massive losses incurred by U.S. nuclear giant Westinghouse Electric Company LLC., then owned by Toshiba.
Under such circumstances, Toshiba has been accelerating the improvement of its finances through such measures as selling its flash memory businesses and increasing capital. It has also completed the sale of almost all the assets related to Westinghouse.
The LNG business is designed to generate profit from the difference between the operational cost of U.S.-based Freeport LNG Development, L.P. liquefying natural gas procured by Toshiba and the actual selling price of LNG.
With LNG prices currently on the rise as well as Toshiba's improving profitability, the company appeared to view this as an ideal environment in which to sell its LNG business.
Nobuaki Kurumatani, Toshiba chairman and chief executive officer, plans to announce the firm's management plan for the next five years before the end of November.
The company thus hopes to complete the sale of its LNG business by the time of the announcement.
However, depending on the outcome of negotiations, there is the possibility that the completion of any sale may be delayed until early next year.
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