Revised 9 month loss bigger than expected at Olympus

Financial scandal has not hit underlying profitability says Olympus

Olympus has revealed a 33bn yen (US$425m, 270m) loss for the 9 months to December 2011 compared with a profit of 3.8bn yen (US$75m, 47m) for same period the previous year. A large loss like this was expected, but it was higher than analysts had calculated.

Before the financial scandal revealed by Olympus' then president and CEO, Michael Woodford, last October, the company was predicting an annual profit to March 2012 of around 18bn yen but has now revised this to a loss of 32bn yen. This suggests that the company will break even for the last three months of the its financial year.

Most of the losses posted can be attributed to revised accounting in the wake of the revelations in October, but even the profitability of the lucrative endoscope division was temporarily affected by component supply problems after the Japanese tsunami disaster earlier in the year. But overall while the medical imaging division made an operating profit if 19bn yen in the last quarter if 2011 the overall group profit was only 8.4bn yen, down 13% on the previous year. This suggests that the camera division, which makes up a large proportion of the residual business, continues to make a loss.

The next milestone for the company will be its AGM on 20th April at which investors will be able to vote in a new board. At least 6 of the incumbent board members are expected to step down but Michael Woodford, who was sacked by most of the current board and who intends to attend the meeting, insists that the entire board should go. Woodford's hopes of returning to lead a new board at Olympus were dashed before Christmas when it was clear that there was little appetite for his plan which centred around a rights issue to re-capitalise the company, something which is rarely adopted in Japan.

Meanwhile the outgoing president Shuichi Takayama reiterated that the existing board's preferred strategy to ally with another company or companies had not started because it would be the task of the new board.