President of Olympus Corporation, Hiroyuki Sasa announces the companies medium-term vision for the next five years during a press conference in Tokyo on June 8, 2012. Scandal-hit Japanese camera and medical equipment maker Olympus said on June 8 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. AFP PHOTO/Toru YAMANAKA
TOKYO — Scandal-hit Japanese camera and medical equipment maker Olympus said Friday 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 ($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 on Friday said it would earn a 7.0 billion yen net profit in the current business year, while about 2,700 job cuts would be ushered in by 2014.
“Around 2,700 employees, or about seven percent of the number of global employees as of March 2012, will be lost by March 2014,” it said in a statement.
The firm has almost 40,000 employees worldwide.
“Returning to the roots of the company and giving it a fresh start, we aim to recover the confidence of stakeholders, to restore the group and give it a new value,” the company added.
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.
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 the firm’s reputation, and Japan’s corporate governance, were badly damaged after the revelations by former Olympus head Michael Woodford, which triggered international criminal investigations and lawsuits from investors.
The firm also said Friday its board has approved a settlement with its former leader 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.
Olympus shares closed 3.64 percent lower on Friday at 1,297 yen, with its business forecast released shortly after the Tokyo market closed.
The beleaguered stock had dived to 424 yen at one point in the wake of the scandal, from 2,482 yen the day before Woodford was ousted.