Sharp Corp., Japan’s largest maker of liquid-crystal displays, cut its annual profit forecast by 40 percent, citing the stronger yen and falling prices of panels.
Net income will probably total 30 billion yen ($367 million) in the year to March 2011, down from its previous forecast of 50 billion yen, the Osaka-based company said in a statement. Operating income, or sales minus the cost of goods sold and administrative expenses, may be about 90 billion yen, compared with an earlier forecast of 120 billion yen, it said.
Sharp, which started a new plant last year in Sakai, western Japan, slashed production of LCD panels two months ago due to slowing demand. The company will likely struggle to boost earnings as a glut for the device will likely worsen during the second-fiscal half, Shunsuke Tsuchiya, a Tokyo-based analyst at Credit Suisse Group AG, said before the announcement.
The maker of Aquos-brand TVs “appears to be wavering in a decision whether it should focus just on panel operations rather than consumer products,” the analyst said.
Sharp rose 0.2 percent to 844 yen in Tokyo trading before the announcement. The stock has lost 28 percent this year, compared with the benchmark Nikkei 225 Stock Average’s 11 percent decline.