Tokyo Electric Power Co, the operator of Japan's stricken nuclear plant, reported a $7.4 billion quarterly loss, nearly as big as its market value, due to a massive provision to compensate victims of the nuclear disaster, soaring fuel costs and a dive in sales.
The March meltdown at the Fukushima complex in north-east Japan spawned the world's worst nuclear crisis since Chernobyl and put the very existence of Asia's largest utility, commonly known as Tepco, in doubt. The company, which aims to start paying compensation in October, said on Tuesday it still doesn't know how much the total compensation will be in the end, as the crippled nuclear reactors continue to spew radioactive material. Tepco's chances of survival improved after parliament last week passed a bailout backed by taxpayer funds and contributions from other utilities to help shoulder a compensation bill that analysts estimate could climb as high as $130 billion.
"It's hard to define how much Tepco will have to write off in losses, but the worst is yet to come," said Yuuki Sakurai, CEO and president of Fukoku Capital Management. For April-June, Tepco reported a net loss of 571.8 billion yen ($7.4 billion), against a loss of 5.5 billion yen in the same period last year. Sales fell 7 percent to 1.13 trillion yen.
Tepco posted a $15 billion net loss for the year to March 31, Japan's biggest non-financial loss. Tepco said it booked a 400 billion yen charge to compensate the victims of the crisis, who include some 80,000 people evacuated from areas surrounding the Fukushima plant, 240 km (150 miles) north of Tokyo. It booked another 105 billion yen in costs for restoring facilities damaged in the March 11 earthquake and tsunami. The disaster knocked out reactor-cooling systems at Fukushima, causing meltdowns and radiation leaks.
Tepco President Toshio Nishizawa told reporters at an earnings briefing in Tokyo the utility will not go insolvent due to damages claims if funds start coming in from the Japanese government's compensation scheme. "Compensation funds will be supplied to us from (the scheme) and that will cancel out our payout in terms of income and expense, so we will not become insolvent," he said. Shares of Tepco, which have lost more than 80 percent since the disaster, closed flat at 389 yen ahead of the results. The stock had tumbled as much as 14 percent in morning following media reports it would book a massive quarterly loss and amid a sharp sell-off in Asian stock markets. Utilities are now operating 15 out of 54 reactors that had been available before the March 11 earthquake and all of those could be shut down by next May if safety concerns continue to prevent restarts.
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