Sharp Corp lowered its operating profit forecast on slumping demand for smartphone displays in China and said it would not forecast net income until the results of reforms at the struggling liquid crystal display maker are clearer.
Operating income is likely to be ￥10 billion (US$83 million) for the year ending March 2016, compared with a previous projection of ￥80 billion, the company said in a statement yesterday. The net loss for the six months ended last month was ￥84 billion, compared with the 66 billion yen average of analyst estimates compiled by Bloomberg.
Sharp has posted net losses in three of the past four years as demand for LCD televisions and displays slumped and lower, while its rivals in South Korea and China increased their market share at the Osaka-based company’s expense.
The company is considering selling a stake in the LCD operation to Hon Hai Precision Industry Co (鴻海精密) or to Japan Display Inc owner Innovation Network Japan Corp, people with knowledge of discussions within the companies have said.
“Sharp needs to improve its performance in the second half to meet the ￥10 billion operating profit target,” Barclays PLC Tokyo-based analyst Kazunori Ito said by telephone.
“Additional restructuring is a road Sharp must go down,” Ito said.
The company reported an operating loss of ￥26 billion for the first half on a preliminary basis yesterday, compared with a forecast for ￥10 billion in operating income and a ￥29.2 billion profit in the period a year earlier.
Sharp is struggling under rising debt and has announced plans to sell the company’s headquarters, withdraw from the TV business in North America and cut back on solar panel manufacturing.
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