Sharp forecasts bigger loss amid global slowdown
TOKYO (AP) – Japanese electronics maker Sharp Corp. is forecasting a bigger loss than first anticipated for the fiscal year ended March, blaming the global recession, a clean out of inventory and restructuring costs.
Sharp expects to post a net loss of 130 billion yen ($1.3 billion), worse than the 100 billion yen loss it had projected in February.
"The global financial crisis is hurting all sectors at an unprecedented speed and scale," Sharp President Mikio Katayama told reporters Wednesday at the company's Tokyo office.
Sharp has said it will cut 1,500 contract workers in Japan by the end of March, and its directors will forgo bonus pay in June and accept pay cuts of up to 50 percent. It had closed some panel production lines for mobile phones in response to the slowdown, which worsened last year.
Japanese electronics makers, including Sharp's bigger rivals like Sony Corp. and Panasonic Corp., have been battered by the strong yen, which reduces its overseas profits, as well as by the plunging prices of consumer electronics products.
Katayama said Sharp will focus on solar-panel and other businesses in health and the environment, as well as become leaner to achieve 200 billion yen of cost cuts, as it tries to return to profitability this year.
The electronics maker said it will give its projection for the fiscal year through March 2010 when it announces earnings on April 27 for the fiscal year just ended.
Globally, Sharp will invest in markets with growth potential to produce goods where they are sold, partly to avert the negative effects of currency fluctuations, he said. Growth was expected in TV sales in China and other new markets in the long term.
The company was also looking at possible international partners to expand its business overseas because it boasts superior panel production technology, he said.
Sharp will start running a new LCD panel plant in Sakai City, central Japan, in October 2009 to prepare for such growth, ahead of schedule. The plant, which will make panels for 40-inch, 50-inch and 60-inch TVs, had initially been set to be up and running by March 2010.
Demand for flat-panel TVs was picking up in recent weeks, especially in China, and so production at Sharp's two existing panel plants, where output had dived earlier this year to about half of previous levels, was back at full speed again, Katayama said.
Before announcing its projected loss in February, the Osaka-based company, which makes Aquos flat-panel TVs, had been forecasting a 60 billion yen profit. It hadn't had yearly red ink in nearly 60 years.
Sharp said adjustments to retailers' inventories of flat panel TVs and liquid crystal displays were behind the latest revision. Sharp also lowered its fiscal sales forecast to 2.85 trillion yen from the initial 2.9 trillion yen.
But Katayama said the company was making progress in lowering inventories, and in the U.S., a crucial market, what had been 3.3 months worth of inventory in September dropped to 0.7 months worth in February.
Sharp stock slid 6.1 percent on the Tokyo Stock Exchange to 813 yen after the lower projections were announced.