TOKYO-- Toshiba Corp. said it would write down the goodwill value of its nuclear power-plant business, including its U.S. subsidiary Westinghouse Electric Co., after years of criticism that the company's outlook on the business was too optimistic.

After reviewing the value of its nuclear arm, the electronics giant said Tuesday that it would book the one-time loss of ¥ 260 billion ($2.3 billion) in light of the business's earnings prospects and Toshiba's financial standing.

The impairment charge will be reflected in results for the fiscal year that ended on March 31.

Toshiba also revised its earnings guidance for the fiscal year, forecasting a larger operating loss of Y690 billion compared with its previous view of ¥ 430 billion due to the nuclear unit's write-down. The group's net loss, however, would be narrower than previously expected, at ¥ 470 billion instead of ¥ 710 billion, as Toshiba said it would be able to book a one-time profit of ¥ 380 billion from the sale of its medical-equipment arm to Canon Inc. last month.

Analysts for years had expected the 140-year-old Tokyo-based Toshiba to write down Westinghouse's goodwill value.

Toshiba said Tuesday it remains hopeful about the Westinghouse's outlook.

Toshiba had planned to use the money from the sale of its medical-equipment arm to Canon to cover restructuring costs and to fund investments in Westinghouse and its memory-chip businesses. But the ¥ 260 billion nuclear-business write-down makes Toshiba's ability to seek additional funds for future investment more difficult.

The Tokyo Stock Exchange put Toshiba on its watch list last year making the firm virtually unable to raise cash from new stock offerings and bond issuance.

"We don't believe its sale of its medical unit will provide sufficient breathing room as its competition in NAND [chip technology] is becoming increasingly fierce," said Amir Anvarzadeh, head of Japan equities at BGC Partners.

Toshiba plans to spend more than ¥ 860 billion over the next three years to beef up its NAND business, but Mr. Anvarzadeh said it remains unclear where the money would come from.

Toshiba fell into financial trouble after revealing in 2015 it had been overstating financial results for years.

Under interim Chief Executive Masashi Muromachi, Toshiba has pared its business portfolio. It has cut more than 7% of the group's labor force, spun off its Japan-based personal-computer unit and sold some noncore businesses, including its medical-equipment arm and part of its semiconductor-manufacturing operation.

Toshiba acquired a majority stake in the U.S. nuclear power-plant constructor a decade ago for $5.4 billion. Analysts at the time had questioned the cost of deal and the U.S. firm's profitability. That view gained further traction in March 2011, when Japan's Fukushima nuclear-plant disaster clouded the industry's outlook.

Westinghouse itself wrote off some of its goodwill—a type of intangible asset—in 2012 and 2013 because of sluggish new orders, but Toshiba retained the value of the U.S. subsidiary as a whole, saying its other businesses—such as reactor maintenance—would guarantee sufficient revenue.

Still, Mr. Muromachi, who plans to step down in June, according to people familiar with the matter, had remained confident in the nuclear business's value, saying Westinghouse's flagship AP1000 nuclear power plant would receive tens of new orders from China and India over the next 15 years.

Write to Takashi Mochizuki at takashi.mochizuki@wsj.com

 

(END) Dow Jones Newswires

April 26, 2016 03:35 ET (07:35 GMT)

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