TOKYO -- Toshiba turned to profit in the April-June quarter for the first time in two years, as the company faces management shake-ups and governance questions from shareholders.
The Japanese industrial conglomerate generated an operating profit of 14.5 billion yen ($131.3 million) in the first quarter to end-June, up by 27 billion yen from the same period in 2020 during the pandemic.
Revenue increased by 21% to 727.8 billion yen, the company announced on Thursday. The rise was supported by an overall recovery from the impact of COVID-19, and growth in the semiconductor and hard disk drive businesses.
The company kept the previous forecast of 3.25 trillion yen in revenue and 170 billion yen in operating profit for the fiscal year ending in March 2022. While many of the company's businesses outperformed expectations, Chief Financial Officer Masayoshi Hirata said that Toshiba still faces uncertainties brought on by the pandemic, including rising material and logistics costs, and a global shortage of semiconductors.
With discontent among activist investors building up for years, Toshiba's management has been in turmoil over the last few months. The first-quarter earnings cover the results under President and CEO Satoshi Tsunakawa, who returned as president to replace Nobuaki Kurumatani in April. The company is now tasked not only with searching for Tsunakawa's successor, but also to find a new board chairman and other board members.
Kurumatani resigned after private equity company CVC Capital Partners expressed interest in a possible $20 billion buyout of Toshiba. The deal was shelved, raising questions from some shareholders about the company's decision-making process.
In June, an independent investigation found that Toshiba colluded with the government to influence activist investors at last year's annual general meeting. This led the company to remove two directors from the list of board candidates for this year's AGM.
President and CEO Satoshi Tsunakawa who returned as president to replace Nobuaki Kurumatani in April attends an online press conference on Aug. 12. At the AGM held in the same month, the reappointment of Osamu Nagayama as board chairman and that of another director were rejected by shareholders, so that only nine out of the original 13 candidates were appointed. Tsunakawa became the interim board chairman.
At an earnings conference on Thursday, Tsunakawa said the company hopes to call for an extraordinary general meeting of shareholders "if possible by the end of the year" to determine audit committee members and the board chairperson. The company's nomination committee has appointed two recruitment companies, he added.
For the selection of the board chair, "I, myself, think that somebody who has experience serving as a CEO could be a good leader in leading [Toshiba's] diversifying businesses," Tsunakawa said.
Tsunakawa stressed that he takes the results of this year's AGM "seriously" and that "the directors and executives are working closely and rigorously for the benefit of all our stakeholders."
Tsunakawa also explained that a committee focused on improving governance, made up of external experts and independent directors, would build on the findings of the investigation about wrongdoings over last year's AGM.
"Rather than taking time to identify whether everything [in the report] is true or not... there are things that we need to take lessons from and we need to take that as the basis for us to engage in improvement measures," he said.
On Thursday, Japanese chipmaker Kioxia Holdings, formerly known as Toshiba Memory, announced its first-quarter earnings. Its sales increased by 11.8% from the same period of 2020 to 329 billion yen. Net profit also increased by 33.3 billion yen to 12.3 billion yen. At the end of August 2020, Toshiba still owns a 40.64% stake in the company.