13 Aug 2021
Posted in Business Fundamentals
Demand for automotive chips helps Toshiba recover from COVID-19 pandemic in Q1 FY2021, says GlobalData
Following the news that Toshiba reported a jump in net profit to JPY18bn (US$162.1m) for the first quarter ended 30 June 2021 (Q1 FY2021) compared to a net loss of JPY11.3bn (US$107m) in Q4 FY2020;
Alisha Bajpai, Analyst at GlobalData, a leading data and analytics company, offers her views:
“The return to profitability, which reflects Toshiba’s recovery from the COVID-19 pandemic, was facilitated by improved net sales, majorly contributed by its subsidiaries Energy Systems & SL, Building SL, Electronic Devices & Storage SL, Retail & Printing SL, and Digital SL. Year-on-year, net sales and operating income increased, mainly due to improvement of semiconductors and hard disk drives (HDDs).
“Japanese business accounted for 49% of the net sales, followed by other Asian countries (28%), North America (12%), Europe (7%), Other locations (4%). On a regional basis, the European business experienced the maximum growth of 60.6%, followed by Asia (47.1%), North America (43.1%), Japan (2.2%), and Other locations (52.8%).
“Electronic Devices & Storage Solutions division reported a growth of 60.5% in net sales, contributing the most to Toshiba’s growth while Retail & Printing Solutions division grew by 29.3%, Semiconductor business by more than 29% (driven by automotive devices), Building Solutions business by 15.6%, Energy Systems & Solutions by 29.5%, and Digital Solutions by 7.6%. However, the Infrastructure Systems & Solutions division partially pulled it back with a 2.9% decline in net sales.
“By the end of FY2021, Toshiba expects net sales to grow by 6.4% to JPY3,250bn and operating profit to increase over 62.8% to JPY170bn, on the back of improved results across all the business divisions. The Japanese conglomerate intends to invest in new business areas, which it believes will drive organic growth, without losing its focus on its core revenue generating areas. It also strives to evolve into a CPS technology company through which it can enhance its earning structure.
“Though the company’s results show recovery from the pandemic, management shake-ups and search for a new chairman and the successor of its interim chairperson and CEO, Mr. Satoshi Tsunakawa, could be a challenge for the company in the short-term.”