TOKYO (Reuters) - The bankruptcy of Westinghouse Electric Co may be a blow to Toshiba Corp's 6502.T international nuclear ambitions, but the Japanese conglomerate still has a profitable business at home.

The logo of Toshiba is seen as shareholders arrive at Toshiba's extraordinary shareholders meeting in Chiba, Japan March 30, 2017. REUTERS/Toru Hanai

Toshiba, whose businesses range from memory chips to rail, is at the heart of Japan’s atomic industry. While this has been moribund since the 2011 Fukushima disaster, Japan still has dozens of reactors that need to be maintained and supplied with parts and fuel once operating.

Toshiba is also involved in the Fukushima clean-up. The cost of decommissioning the wrecked Fukushima Daiichi facility alone is estimated by the Japanese government at 8 trillion yen ($71 billion). Some experts have predicted the process could take as long as a century.

All but three of Japan’s 54 commercial nuclear reactors are currently shut down. Twelve are set for decommissioning, including the six at the Fukushima stations.

Even idle, they need constant maintenance and supervision.

For Toshiba, the main contractor or a major component supplier to 20 of those reactors, that’s a stable business, and one of its most profitable in terms of return on sales. Fuel and servicing make up the lion’s share of the group’s nuclear revenue.

“They can come out of this (Westinghouse bankruptcy) with a very healthy nuclear business in Japan,” said George Borovas, global head of nuclear at law firm Shearman & Sterling, noting this would include servicing, maintenance and decommissioning.

“Business lines such as nuclear fuel supply and services have a significantly different risk profile to nuclear new build projects,” he added.

Toshiba was undone by its push into construction through Westinghouse, its U.S. nuclear arm that ran up billions of cost overruns as two key U.S. projects were delayed by years to meet growing safety demands post-Fukushima.

Global construction is expected to have lost money in the 2016 financial year, according to provisional forecasts by Toshiba last month, but the Japanese nuclear power business is forecast to see a return on sales of 8 percent for the year. Toshiba aims to increase that to 10 percent by 2019.

JAPAN SOLUTION

The Westinghouse collapse could also revive consolidation in Japan's nuclear industry, which, unusually, includes two other main suppliers - Mitsubishi Heavy Industries (MHI) 7011.T and Hitachi 6501.T.

At a fractious Toshiba shareholders meeting on Thursday, Yoshimitsu Kobayashi, an external director who heads the group’s management nomination committee, said he wanted Toshiba, Hitachi and MHI to eventually form a nuclear holding company.

The three firms were in talks last year to merge their nuclear fuel operations, but the process was delayed after the Westinghouse troubles came to light.

“It would make sense. There’s no point in having three companies chasing a dying market in Japan,” said Tom O’Sullivan, founder of independent energy consultancy Mathyos Japan.

Any move to consolidate, though, could come up against a government that wants to keep its nuclear options open in the aftermath of Fukushima, and, analysts note, the three companies employ different technologies.

A Hitachi spokesman said there are no discussions on merging the companies’ overall nuclear operations. He noted Hitachi’s nuclear business is profitable. It has forecast sales of 150 billion yen in the year ending Friday.

MHI said it had no “specific plans to deepen” its nuclear cooperation with Toshiba, highlighting its use of different reactor technology. The company does not break out its nuclear business and did not say if it makes money.

FUKUSHIMA FALLOUT

Toshiba was the main contractor for three of the Fukushima Daiichi units and supplied the reactor vessels to two others. It’s also the main contractor and equipment supplier on two units of the nearby Fukushima Daini station, which may never be restarted due to local opposition, and is lead contractor and supplier on three reactors at the Kashiwazaki Kariwa nuclear plant, the world’s biggest.

While servicing nuclear stations will continue to be profitable, Toshiba’s Senior Executive Vice President Yasuo Naruke on Thursday offered a lament to angry shareholders.

“The changes in the environment for the nuclear business, including the Fukushima disaster, were the remote cause for the Westinghouse writedown,” he said.

($1 = 112.1100 yen)