Sharp Secures Second Bank Bail-Out

After months of speculation, Sharp has unveiled its new medium-term management plan which includes the second bank bail-out in three years and the cutting of 10% of its global workforce. The company also said in its annual results announcement that there still existed “events or conditions that may cast a material uncertainty about Sharp’s ability to continue as a going concern”, echoing a comment made by the company in 2012 (Display Monitor Vol 19 No 44).

Sharp’s main lenders, Mizuho and Bank of Tokyo-Mitsubishi UFJ, have agreed to inject a total of ¥200 billion ($1.6 billion) in a debt-for-equity swap. Sharp will also receive an additional ¥25 billiion ($209.7 million) from investment firm, Japan Industrial Solutions. The new turnaround plan will see the loss of 10% of Sharp’s worldwide workforce, including 3,500 jobs cut in Japan and the sale of its head office in Osaka. In addition, Sharp will reorganise its existing company structure from eight businesses to five: Consumer Electronics, Electronic Component and Device, Business Solutions, Display Device, and Energy Solutions.

The announcement came as Sharp released its results for the year, with turnover down 4.8% to ¥2.8 trillion ($23.5 billion) from ¥2.9 trillion ($24.3 billion) in the previous year, which it attributed to unachieved targets in LCD TV and small and medium size LCDs. The company also reported a “significant” net loss of ¥222.3 billion ($1.8 billion), which was due in part to inventory write-down in small and medium LCDs, as well as structural reform of its overseas LCD TV business.

Sales of LCD TVs fell for the third year in a row, generating revenue of ¥340 billion ($2.8 billion) from shipments of 6.5 million units. Last year Sharp sold 7 million units and achieved sales of ¥370 billion ($3.1 billion), and in 2013, the company sold 7.8 million LCD TVs, generating sales of ¥414 billion ($3.4 billion). Mobile phone sales were slightly ahead year on year at ¥195 billion ($1.6 billion) from ¥193.6 billion ($1.6 billion), though lower than 2013 when mobile phone sales contributed ¥205.5 billion ($1.7 billion) to total turnover. Unit shipments of mobile phones have remained broadly consistent over the last three years at around 5.3-5.5 million units.