Scandal-hit camera and medical equipment maker Olympus (IW 1000/362) said on June 8 that it will cut about seven percent of its workforce -- and book a profit this year -- as it tries to recover from a loss cover-up scandal.
The firm's balance sheet deteriorated, with a loss of 48.99 billion yen (US$618 million) in the fiscal year through March, after its British former chief executive blew the whistle last year over $1.7 billion worth of losses that the company had moved off its balance sheet. Olympus's reputation, and Japan's corporate governance, were badly damaged after the revelations by Briton Michael Woodford, which triggered international criminal investigations and lawsuits from investors.
Olympus on June 8 said it would earn a 7.0 billion yen net profit in the current business year, while cutting 2,700 job cuts by 2014. The firm has almost 40,000 employees worldwide.
"We created the slogan for our five-year business plan as 'Back to Basics,' that is, to make efforts at creating the world's number one product in order to restore trust among stakeholders," Olympus President Hiroyuki Sasa told a press briefing in Tokyo.
Olympus also said it would consolidate its global manufacturing base, while aiming to book a net profit of 40 billion yen and 85 billion yen in the 2014 and 2016 fiscal years, respectively. Among the changes, four Japanese plants will be consolidated into one facility while a microscope plant will be moved to China, Sasa said.
The loss in Olympus' latest fiscal year, which reversed a small profit of 3.87 billion yen a year earlier, was largely attributed to costs related to the cover-up as sales in the period rose slightly at 848.55 billion yen.
The company is best known for its cameras, but it is also a world leader in medical imaging equipment and has reportedly been in talks over a possible capital injection from Japanese electronics giants Panasonic and Sony. However Sasa on June 8 said only that "it's true that we've been offered (the chance) of a financial tie-up from more than one company."
The firm also said on June 8 that its board has approved a settlement with Woodford over an unfair dismissal claim filed in Britain, with the payout set at 10 million pounds ($15 million). Woodford, the first non-Japanese person to lead the company, was fired in October after questioning the firm's accounting. In April, during an emergency general meeting of shareholders in Tokyo, Woodford demanded to know why he was sacked shortly before exposing a scheme that saw huge losses moved off the firm's balance sheet.
Olympus had initially denied allegations it had used past acquisitions and outsized consultant fees to hide huge losses dating back to the 1990s, but eventually admitted wrongdoing. In March, the company and three former senior executives -- including ex-president Tsuyoshi Kikukawa -- were charged over their role in the scandal.
Copyright Agence France-Presse, 2012