Japanese electronics maker Sharp Corp is forecasting a bigger loss than first anticipated for the fiscal year ended last month, blaming the global recession, a clean-out of inventory and restructuring costs.
Sharp expects to post a net loss of ¥130 billion (US$1.3 billion), worse than the ¥100 billion 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 yesterday at the company’s Tokyo office.
Sharp has said it will cut 1,500 contract workers in Japan by the end of last month 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.
Katayama said Sharp would focus on solar-panel and other businesses in health and the environment, as well as become leaner to achieve ¥200 billion in 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 next March 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 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 next March.
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 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 from the initial ¥2.9 trillion.
But Katayama said the company was making progress in lowering inventories and in the US, a crucial market, what had been 3.3 months worth of inventory in September dropped to 0.7 months worth in February.