Toshiba Corp. said Thursday it will slash up to 6 percent of its workforce in Japan by offering staff early retirement packages and reduce redundant operations by integrating key subsidiaries, in its first major revamp plan for turning its business around after going private late last year.
"This is a necessary thing to do to ensure the company survives for the next 100 years," President Taro Shimada told a press conference in Tokyo as the industrial conglomerate announced its medium-term business plan that included shedding 4,000 jobs.
The early retirement plan aims to cut labor costs and targets domestic employees aged 50 and over working at Toshiba group firms. Most of the job cuts will be in back-office departments, it said, adding that it plans to complete the process by the end of November.
"It was an agonizing decision to make," Shimada said.
The company will instead devote its resources to growth areas, including power semiconductors that can be used in electric vehicles, artificial intelligence products and renewable energy equipment, as well as quantum technology.
In another streamlining effort, four main subsidiaries operating in business areas such as energy and infrastructure are expected to be integrated into Toshiba.
The company also said it will consolidate its headquarters functions in Tokyo's Minato Ward to Kawasaki in the neighboring Kanagawa Prefecture, instead of maintaining its two head offices, to increase efficiency.
Toshiba's delisting in December came after a 2 trillion yen ($13 billion) buyout from a consortium led by Japan Industrial Partners Inc. as part of efforts to rebuild its business following a spate of problems in the 2010s, ranging from an accounting scandal to massive losses at its U.S. nuclear arm.
The delisting made it easier for Toshiba executives to focus on its management and make quick decisions, as it now only has to consult with a sole shareholder, JIP, rather than being interfered with by activist shareholders like before, Shimada said.
"We put 100 percent into coming up with this plan so that we can realize the best version of Toshiba," Shimada said. "We will put the company back on a growth track."
Toshiba said it posted a net loss of 74.8 billion yen for fiscal 2023 that ended March, a reversal from a net profit of 126.6 billion yen the previous year. Sales fell 2 percent to 3.29 trillion yen, while operating profit fell 64 percent to 39.9 billion yen.
Under its medium-term business plan, the company aims to increase its operating profit to 380 billion yen for fiscal 2026.
The company plans to raise its operating margin to 10 percent in fiscal 2026 from 1.2 percent in fiscal 2023, setting itself the goal of its focus areas, such as power semiconductors and digital operations, reaching at least 10 percent, with its less profitable businesses such as elevator manufacturing hitting at least 5 percent.
Related coverage:
Toshiba mulls cutting thousands of domestic jobs to reduce costs
Japan to give 243 bil. yen to Kioxia-Western Digital chip plants
Toshiba ends 74-year history as public firm, set for turnaround
