Sharp eyes swing to operating profit on cost cuts
OSAKA -- Sharp expects to report its first group operating profit in three years, totaling around 40 billion yen ($384 million), for fiscal 2016, The Nikkei learned Tuesday.
The struggling Japanese electronics company, now with Taiwan's Hon Hai Precision Industry as majority owner, sees last year's payroll cuts and withdrawal from the money-losing North American production of TVs helping bring operations into the black. Sharp continues working to reduce expenses under Hon Hai's direction.
The company logged a 161.9 billion yen operating loss last fiscal year. Sharp has not issued earnings forecasts for the fiscal year ending in March but apparently has provided earnings guidance to its primary bank lenders in hopes of ensuring their continued support for the company's turnaround.
Sharp expects to suffer a third straight annual net loss, reaching 40 billion yen, albeit smaller than last fiscal year's 255.9 billion yen.
Results for the April-September half are likely to show improvement over the year-earlier 25.1 billion yen operating loss. But any turn for the better will owe largely to job cuts rather than growth. Sharp offered early retirement to more than 3,000 employees in summer 2015. Meanwhile, sales of liquid crystal display panels and other products continue to languish.
Full-year sales are expected to fall 20% to around 2 trillion yen -- a level the company has maintained since fiscal 2001 but may lose this time.
Overinvestment in LCD production nearly drove Sharp to financial ruin, prompting it to slash more than 10% of its domestic workforce. Since Hon Hai's capital injection in August, Sharp has been tackling costs in its supplier network and other areas.
President Tai Jeng-wu, a Hon Hai transplant, has told Sharp employees in an internal memo that the company aims to post an operating profit this fiscal year.