Sharp has reversed its profit forecast for this year, saying that it now expects to record a net loss of $256 million as its TV business continues to lose money. Sharp had previously forecast a net profit of $256 million for the current year.
The company’s digital information equipment unit, whose main product is LCD TVs, saw third quarter sales drop 10% year on year to ¥194.7 billion ($1.66 billion). Sharp said that it foresees worsening profits from TV sales because of a market downturn and intensifying competition in its main markets. As a result, Sharp plans to expand its product line up in Japan and revamp the value chain to become more cost competitive, while in North America the company will create high value-added models by enhancing its 4k line up and by commercialising next-generation, high-resolution TVs. Meanwhile in Europe, Sharp will continue the steady implementation of structural reforms so that the company can return to profitability in fiscal 2015 and beyond.
Sales of LCDs in Q3 were below expectations, due to factors including slow demand growth in the tablet market and an increase in channel inventory in China. As a result, profitability dropped due mainly to a worsened model mix that resulted from lower sales of high value-added models.
In Q3, Sharp swung to a net loss of ¥11.9 billion ($101.3 million), from a net profit of ¥22 billion ($187.3 million) in the third quarter of last year, while turnover dropped 6.4% to ¥762.7 billion ($6.5 billion) from ¥815.2 billion ($6.9 billion).
In the first nine months of this year, the company reported a net loss of ¥7.1 billion ($60.4 million), having seen a net profit of ¥17.7 billion ($150.7 million) for the same period of the previous year. Turnover for the nine month period was broadly flat at ¥2.1 trillion ($17.8 billion). Sales of LCDs were ¥588.9 billion ($5 billion), down 5.4% from a year earlier, mainly due to a fall in sales of large sized LCDs, which was slightly offset by an increase in small and medium sized LCDs for smartphones and tablets.
