Feb. 6 (Bloomberg) — Sharp Corp., Japan’s biggest maker of liquid-crystal-display televisions, will post its first loss in more than five decades and cut 1,500 temporary jobs because of falling sales of the devices.
The net loss will probably be 100 billion yen ($1.1 billion) in the 12 months ending March 31, Osaka-based Sharp said today. The forecast is worse than a 57.1 billion yen loss median of seven analyst estimates compiled by Bloomberg in the past four weeks.
Sharp joins Sony Corp., Panasonic Corp. and NEC Corp. in forecasting losses and cutting jobs as the global recession curbs demand for consumer electronics. Global LCD-TV sales will fall 16 percent this year to $64 billion, the first drop in the industry’s history, according to researcher DisplaySearch.
“The forecast reflects the rapidly worsening business environment in the October-December period and the company clearly expects a similar degree of deterioration in the current quarter,” said Yoji Takeda, who manages about $1.1 billion at RBC Investment (Asia) Ltd. in Hong Kong. “The situation may improve a bit in the coming fiscal year, but it’s highly questionable whether Japanese manufacturers like Sharp can make a profit.”
The loss would be Sharp’s first for a fiscal year since the company’s shares were listed on the Tokyo Stock Exchange in 1956. The company on Oct. 6 projected 60 billion yen net income and posted profit of 101.9 billion yen in the year-earlier period.
LCD-TV Sales
Sharp forecast sales of LCD TVs will fall 10 percent this fiscal year to 730 billion yen even as the number of sets sold increases 21 percent to 10 million.
“The decline in LCD-TV prices was so steep that it pushed our business into the red, and was so sharp that our cost-cutting efforts couldn’t keep pace,” Tetsuo Onishi, a Sharp director in charge of finance and accounting, told reporters in Tokyo.
The deficit includes 50 billion yen in restructuring costs and a one-time charge of 43.3 billion yen to reflect the decline in the value of shareholdings, Sharp said.
Sharp is the largest shareholder of Tokyo-based Pioneer Corp., a flat-panel TV maker, with a 14.3 percent stake. Pioneer shares declined 84 percent in 2008.
Sales will probably decline 15 percent from a year earlier to 2.9 trillion yen, less than the previous projection of 3.42 trillion yen, Sharp said. The operating loss, or revenue minus the cost of goods sold and administrative expenses, may be 30 billion yen, missing the earlier estimate of 130 billion yen profit.
Closing Production Lines
Sharp said in December it will close by September production lines at two plants in western Japan which make LCD panels for use in mobile phones and personal computers. The company on Jan. 29 agreed with Sony to delay forming a planned venture to make LCD panels by about a year to March 2010. The two companies are now in talks to finalize details of the venture, which will be decided by June 30.
Sony, the world’s second-biggest consumer-electronics maker, last month forecast a record operating loss of 260 billion yen and is cutting 16,000 positions by March 2010. Larger rival Panasonic this week projected a 380 billion yen net loss and announced 15,000 jobs will go. NEC, Japan’s largest personal- computer maker, said on Jan. 30 it will eliminate more than 20,000 jobs and expects to post a net loss of 290 billion yen this year.
Olympus Forecasts Loss
Separately Olympus Corp., a Japanese maker of digital cameras and the world’s biggest manufacturer of endoscopes, reversed its full-year forecast to a 45 billion net loss from 19 billion yen profit as digital camera prices drop and the stronger yen erodes overseas earnings.
Sales of digital cameras dropped 26 percent to 172.7 billion yen in the nine months ended Dec. 31 and will probably decline 32 percent to 201 billion yen for the year, the Tokyo based company said. Olympus generated about 63 percent of its sales in the nine-month period. A stronger yen reduces the value of overseas earnings when converted into local currency.
In the three months ended Dec. 31, Sharp posted a net loss of 65.8 billion yen, compared with 29.5 billion yen profit a year earlier, the company said in a separate statement.
Sales in the quarter fell 20 percent to 735.1 billion yen, while operating loss in the three months was 15.8 billion yen, a turnaround from 51.9 billion yen profit a year earlier.
Sharp rose 4.5 percent to close at 742 yen in Tokyo trading before the company’s announcement. The stock dropped 68 percent last year, more than the 54 percent decline by the Topix Electrical Appliances Index.