Sharp Plans to Raise 166 Billion Yen From Share Sales

Sharp Corp. (6753), a supplier of screens to Apple Inc., will raise as much as 166.4 billion yen ($1.7 billion) in share sales in an effort to rebuild its balance sheet after record annual losses.

Japan’s largest maker of liquid-crystal displays will sell as much as 149 billion yen of shares to the public, the Osaka-based company said in a statement today. The company also will make allotments to Makita Corp. (6586), Denso Corp. (6902) and Lixil Group Corp. (5938), with proceeds to be used for capital expenditure, it said.

Intensified competition in LCDs and flat-panel TVs drove Sharp to losses totaling 921 billion yen during the past two financial years. The supplier for Apple’s iPhone and iPad is tapping into surging demand for new stock amid a Japanese rally in shares after previously selling minority stakes to Samsung Electronics Co. and Qualcomm Inc. (QCOM)

“Sharp had no choice but to increase capital, and they will breathe freely for a while,” said Tsunenori Ohmaki, an analyst at Tachibana Securities Co. in Tokyo. “The business has recovered more strongly than its plan, thanks to the restructuring.”

Sharp also increased its first-half forecasts, with operating income projected at 30 billion yen in the six months ending Sept. 30 from 15 billion yen. Sales will be 1.31 trillion yen, up from an earlier projection of 1.27 trillion yen. The company’s net-loss forecast was halved to 10 billion yen.

Share Recovery

Domestic demand for its solar panels and better-than-expected sales of large LCD screens have helped restore earnings, the company said.

The stock rose 1.6 percent to close at 376 yen in Tokyo trading before the announcement. The shares have climbed 24 percent so far this year, while Japan’s benchmark Topix index has gained 39 percent.

Companies have raised more than $34 billion in share sales in Japan this year, compared with $23 billion for all of 2012, according to data compiled by Bloomberg. This year’s figure doesn’t include Sharp’s transaction.

Dentsu Inc., the Japanese advertising company that bought U.K.’s Aegis Group Plc. in March, raised $1.2 billion in a July offering. Suntory Beverage & Food Ltd. and Olympus Corp. (7733) are also among the companies that raised funds through share sales this year, the data show.

Solar Panels

Sharp last month reported a net loss of 18 billion yen in the June quarter, narrower than the 138 billion-yen loss a year earlier. Operating profit, or sales minus the cost of goods sold and administrative expenses, totaled 3 billion yen for the quarter, compared with a loss of 94 billion a year earlier, the company said. Sales rose 33 percent to 608 billion yen.

The operating loss at the LCD unit narrowed to 9.5 billion yen during the quarter, from a loss of 63.5 billion yen a year earlier, according to the company.

Improved Japanese sales of solar cells follows the introduction of an incentive program in July 2012 to encourage investments in clean energy. Residential use and industrial-sized solar projects are spurring demand, Sharp has said.

Japan’s domestic shipments of solar cells and modules surged almost fourfold in the fiscal first quarter, the Japan Photovoltaic Energy Association said Sept. 12.

Operating profit at the electronics maker’s solar unit was 6.8 billion yen in the three months ended June 30, compared with a 6.9 billion-yen loss for the same period last year, the company said in an August filing.

Sharp has 200 billion yen of convertible bonds maturing at the end of this month, according to data compiled by Bloomberg. Its debt is rated B+ by Standard & Poor’s, which is four levels below investment grade.

The maker of Aquos TVs is forecasting net income of 5 billion yen for the year to March 2014, its first annual profit in three years, after job cuts. The company sold a stake in its largest LCD plant to Taiwanese billionaire Terry Gou last year to boost sales through his Foxconn Technology Group, the world’s biggest contract manufacturer of electronics.

To contact the reporters on this story: Mariko Yasu in Tokyo at myasu@bloomberg.net; Grace Huang in Tokyo at xhuang66@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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