Tokyo Electric Power Co reported a $15 billion net loss on Friday to account for the disaster at its Fukushima nuclear plant, marking the biggest loss in Japan by a non-financial company and prompting the firm to warn its future was uncertain.
Much-criticised president, Masataka Shimizu, 66, resigned to take responsibility for the worst nuclear crisis since Chernobyl in 1986, making way for an insider, managing director Toshio Nishizawa, 60. Engineers are battling to plug radiation leaks and bring the plant north-east of Tokyo under control more than two months after a 9.0 magnitude earthquake and deadly tsunami that devastated a swathe of Japan's coastline and tipped the economy into recession.
The disaster has triggered a drop of more than 80 percent in Tokyo Electric's share price and forced the company to seek government aid as it faces compensation liabilities that some analysts say could top $100 billion. Before speaking, Shimizu bowed before a packed press conference at the company's headquarters in the capital. Nishizawa, who has worked at the utility since 1975, stood to his left.
"We feel sorry for the victims of the earthquake and tsunami. At the same time we want to sincerely apologise for our nuclear reactors in Fukushima causing so much anxiety, worry and trouble to society," the outgoing president said. For the business year that ended March 31, the company, commonly known as Tepco, posted a 1.25 trillion yen ($15 billion) net loss after accounting for 1 trillion yen to scrap reactors at the Fukushima complex and write off tax assets.
The earnings figures were released after the close of Tokyo stock market trading and represent a landmark in the company's 60-year history. Japan Prime Minister Naoto Kan and other lawmakers have lambasted Tepco for its handling of the disaster. At one stage, Kan reportedly demanded company executives tell him: "What the hell is going on?"
Shimizu did not make any public appearances in the two weeks that followed the March 11 disaster, sparking criticism Tepco lacked leadership as it fought to bring the plant under control. Nishizawa takes over at a time when even the company admits there is major uncertainty over whether it can continue as a going concern.
Apart from compensation claims and quake tsunami damage, TEPCO expects other costs to include 700 billion yen this business year to buy more gas and coal to replace lost nuclear power capacity. Since the crisis, Tepco has been supported by banks that offered emergency loans. The government has promised to help Tepco handle compensate claims by thousands of households and businesses forced to evacuate from around the Fukushima plant because of radiation risks, although the issue is far from settled.
"I feel a massive weight of responsibility to assume the post when we are in an unprecedented crisis never experienced in the history of the company," said Nishizawa. "But I decided to take it because I believe it is my mission to challenge head-on this difficult situation." Tepco's five-year credit default swaps reached a record 762 basis points late on Thursday, or the equivalent of $762,000 to insure $10 million of debt against default.
The spreads have more than tripled since the government's chief spokesman Yukio Edano last week suggested banks waive some of Tepco's debt, raising concern the government may not support the company. Economics minister Kaoru Yosano said banks should not be liable.