JAPAN NEWS: Sharp's declining sales lead to warning of first loss in over 50 years
Sharp has become the latest major Japanese company to report a hefty net loss for the last three months of last year. And the company's warning that its end-of-financial-year figures are expected to show its first full-year loss in over half a century.
That means job cuts, and the mothballing of production lines at two of its LCD manufacturing plants, including its massive facility in Kameyama, Japan (pictured). The plant's capable of producing well over 150,000 LCD panels, and 100,000 finished TVs, per month.
Sharp says its loss for October to December last year was 65.8bn yen, or just over £480m, compared to a profit of Y29.6bn yen (£216m) in the same period in 2007. That points towards an overall loss for the 2008-9 financial year of around £800m.
LCD TVs up 21% by volume, earnings down 10%
The company is blaming the continued strength of the Japanese currency on world markets, and reduced sales by value of LCD TVs, caused by continued price pressure. Though the number of LCD TVs sold is expected to have risen by 21% to 10 million in the 2008-9 financial year, sales by value will fall by 10% to
Y730bn, or about £5.3bn.
Analysts in Japan also reckon another factor won't have helped Sharp too much: it owns a 14.3% stake in Pioneer, which has seen a steep decline in share value over the past 12 months. This time last year Pioneer shares stood at Y1282 each; right now they're at
Y176, having dropped to a low of Y140 during December 2008.
Sharp's recovery plan involves the usual round of salary reductions for top executives and non-payment of bonuses, closing down some production at Kameyama, and also at Tenri, Japan, and optimising products and panel sizes at other plants.
1500 contract staff in Japan will also be lost.
Sharp/Sony LCD project delayed
Sharp has also announced ot's putting on ice its plans to establish a joint venture with Sony to produce large-screen LCD panels using 10th-generation mother glass substrates.
Almost a year ago the two companies announced their intention to set up such a venture, but now they've extended the 'non-binding memorandum of intent' to allow a year's delay of the establishment of the project. The target date for a firm agreement is now the end of June next year.
However, Sharp says that its new LCD panel factory – being built in Sakai City, Japan, close to the company's Osaka HQ – will still start operations by March 2010.