Struggling Japanese electronics maker Sharp Corp yesterday said that it expects to post its first operating profit in three years and narrow its net loss on the back of reforms and its buyout by Taiwan’s Hon Hai Precision Industry Co (鴻海).
The Japanese industrial mainstay, pummeled by huge losses and mounting debt, was formally taken over in August by Hon Hai, known as Foxconn outside Taiwan, which took a 66 percent stake for US$3.7 billion.
It was the first foreign acquisition of a major Japanese electronics firm and marked a watershed for Japan’s once-mighty home electronics sector, which nurtured global brands including Sony and Panasonic, but has struggled in the face of foreign competition.
Photo: Reuters
Sharp said it expects to report a ¥25.7 billion (US$245 million) annual operating profit in the business year ending in March, citing “structural reforms and synergy effects with the Hon Hai Group.”
Sharp saw a ¥161.9 billion annual operating loss in the past fiscal year.
Its net loss is expected to shrink to ¥41.8 billion from ¥255.9 billion, but sales are seen falling to ¥2 trillion from ¥2.5 trillion.
For the April-to-September period, Sharp said it posted a ¥45.4 billion net loss, about half the ¥83.6 billion booked in the same period the previous year.
Operating profit was ¥79 million, up from a ¥25.1 billion operating loss.
Despite the improvements, analyst Hideki Yasuda at Ace Research Institute expressed caution.
“We can’t say Sharp achieved full recovery only by seeing quarterly figures,” he said. “The prospect for the company is still uncertain. It’s too early to gauge the impact of Hon Hai on Sharp’s earnings.”
“It is still unknown if Sharp managers and employees can keep up with Hon Hai’s expected fast-moving reform,” Yasuda said.
Over the past decade Sharp bet almost everything on liquid crystal displays (LCDs), boasting the most advanced technology in the world.
That turned into a weakness when the market became more competitive after the global financial crisis in 2008 and lower-cost companies began to dig into its profits.
While the firm still produces cutting-edge LCD screens, it has lacked the huge research and development funds necessary to keep ahead of the competition.
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